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This strategic shift aims to synchronize taxpayer submissions with data already held by the government from various streams, thereby bolstering transparency and enabling more targeted, risk-based audits. The move signals a broader transition towards technology-driven tax administration and enhanced digital verification requirements.
Expanded Data Capture
Across multiple forms, taxpayers will now be required to furnish primary and secondary mobile numbers and email IDs, along with primary and secondary addresses. This is aimed at improving traceability and communication, facilitating better analytics-based scrutiny. Additional financial disclosures, such as mandatory bank balance reporting and investment disclosures, have also been introduced in select forms like ITR-4, further deepening taxpayer profiling.
ITR-1: Expanded Eligibility for Salaried Individuals
The most significant change in ITR-1 (Sahaj) is the expansion of eligibility for resident individuals earning income from up to two house properties, a notable increase from the previous limit of one property. The house property schedule has also become more detailed, demanding disclosure of property address, ownership percentage, co-owner details, and tenant information, including the tenant's PAN or Aadhaar. The form also removes separate reporting for overseas retirement benefit accounts and introduces representative assessee reporting.
ITR-2: Investor Capital Gains Overhaul
ITR-2, a common choice for high-income salaried individuals and stock market investors, has been significantly restructured to align with the revised capital gains framework introduced by Finance Act amendments. The previous separate disclosure for gains earned before and after July 23, 2024, is no longer applicable for AY 2026-27. Other updates include granular interest income reporting from various entities, specific non-resident income disclosures, mandatory transaction reference numbers for Section 80G donations, and expanded political contribution disclosures.
ITR-3: Business and Trader Reporting Widens
ITR-3, used by businesses, traders, and professionals, faces the most substantial expansion. The revised form now separately captures Futures & Options trading turnover and income, presumptive income for non-resident businesses, and granular tax regime selection history. It also features expanded political contribution disclosures and disability-type disclosures. Legacy capital gains reporting bifurcations have been removed, reflecting the updated framework. The form also acknowledges the extended non-audit filing deadline, with August 31 now an available option.
ITR-4: Presumptive Taxation Evolves
ITR-4 (Sugam), for taxpayers opting for presumptive taxation, also sees updates. Like ITR-1, it now supports reporting for up to two house properties. Furthermore, the form mandates the reporting of bank balances and introduces an 'Investments' field under business financial particulars. It realigns Form 10IEA reporting requirements and includes Section 234I fee reporting. While remaining a simplified return mechanism, the form is becoming more data-oriented, requiring taxpayers to provide greater financial insights.