ITR Forms for AY 2026-27: Why FY 2025-26 Returns Are Filed Under the Income-tax Act, 1961
The Income-tax Act, 2025 came into force on 1 April 2026, but returns for income earned in FY 2025-26 (Assessment Year 2026-27) are filed under the Income-tax Act, 1961. The CBDT notified the AY 2026-27 ITR forms on 30 March 2026 as amendments to the Income-tax Rules, 1962. This article explains why the old Act still governs these returns, what was notified, which form applies to whom, and the time limits that apply.
Key Takeaways
- Section 536(2)(a) to (c) of the Income-tax Act, 2025 preserves the operation of the Income-tax Act, 1961 for tax years beginning before 1 April 2026, so the FY 2025-26 return is a 1961 Act return.
- ITR-1 to ITR-7, ITR-V and ITR-Ack for AY 2026-27 were notified on 30 March 2026 (Notifications No. 45 to 51/2026) under section 139 read with section 295 of the 1961 Act. Form ITR-U was notified the same day (Notification No. 52/2026).
- ITR-1 and ITR-4 now allow income from up to two house properties, against one earlier.
- Under the 1961 Act as amended by the Finance Act, 2026, non-audit business cases have a 31 August 2026 due date and revised returns can be filed up to 31 March 2027. Updated returns are allowed within 48 months from the end of the assessment year.
- The return for Tax Year 2026-27 under the new Act is a separate obligation that arises only after that year ends.
Why FY 2025-26 Returns Stay Under the Income-tax Act, 1961
Section 536(1) of the Income-tax Act, 2025 repeals the Income-tax Act, 1961. Section 536(2) then limits the effect of that repeal. Three clauses matter for the AY 2026-27 return:
- Section 536(2)(a): nothing affects the previous operation of the repealed Act or anything duly done under it.
- Section 536(2)(b): nothing affects any right, privilege, obligation or liability acquired, accrued or incurred under the repealed Act.
- Section 536(2)(c): the repealed Act continues to apply to proceedings pending on 1 April 2026 and to proceedings initiated on or after that date (including notices, assessment, reassessment, rectification, penalty and appeals) “in respect of any tax year beginning before the 1st April, 2026”, following the procedure of the repealed Act.
Section 536(3) adds that a reference in the new Act to a tax year commencing on 1 April 2025 or earlier is read as the corresponding previous year under the repealed Act. Section 536(4) applies section 6 of the General Clauses Act, 1897 to the effect of the repeal, without prejudice to sub-section (2).
The CBDT’s transition FAQs (updated 2 April 2026) apply this directly. FAQ Q3.5 states that the ITR for income earned during FY 2025-26 will be filed for AY 2026-27 under the 1961 Act and that, although filing takes place after 1 April 2026, the return “is therefore governed entirely by the old Act”. FAQ Q3.18 and Q3.19 add that a defective return notice under section 139(9) and a scrutiny notice under section 143(2) for AY 2026-27 are also handled under the 1961 Act, by virtue of Section 536(2)(c).
What the CBDT Notified on 30 March 2026
Each of the following notifications was issued under section 139 read with section 295 of the Income-tax Act, 1961 (section 139(8A) read with section 295 for ITR-U) and amends Appendix II of the Income-tax Rules, 1962. Notifications No. 45 to 51/2026 came into force on 31 March 2026 and apply to returns filed for AY 2026-27. Notification No. 52/2026 came into force on publication.
| Notification | Rules | Forms substituted or inserted |
|---|---|---|
| No. 45/2026, G.S.R. 226(E) | Income-tax (Second Amendment) Rules, 2026 | ITR-1 (Sahaj) and ITR-4 (Sugam), with amendments to rule 12 |
| No. 46/2026, G.S.R. 227(E) | Income-tax (Third Amendment) Rules, 2026 | ITR-2 |
| No. 47/2026, G.S.R. 228(E) | Income-tax (Fourth Amendment) Rules, 2026 | ITR-3 |
| No. 48/2026, G.S.R. 229(E) | Income-tax (Fifth Amendment) Rules, 2026 | ITR-5 |
| No. 49/2026, G.S.R. 230(E) | Income-tax (Sixth Amendment) Rules, 2026 | ITR-6 |
| No. 50/2026, G.S.R. 231(E) | Income-tax (Seventh Amendment) Rules, 2026 | ITR-7 |
| No. 51/2026, G.S.R. 232(E) | Income-tax (Eighth Amendment) Rules, 2026 | ITR-V and ITR-Ack |
| No. 52/2026, G.S.R. 233(E) | Income-tax (Ninth Amendment) Rules, 2026 | ITR-U (updated return), inserted after ITR-A |
A corrigendum dated 10 April 2026 (Notification No. 57/2026, G.S.R. 262(E)) substituted Schedule-IT (advance tax and self-assessment tax payments) in ITR-1 and corrected row numbering in the salary schedule of ITR-4.
The verification text in the notified forms confirms the governing law: the taxpayer declares that the information is “in accordance with the provisions of the Income-tax Act, 1961”.
Which Form Applies
The table reproduces the eligibility description printed at the top of each AY 2026-27 form. ITR-2, ITR-3 and ITR-5 to ITR-7 refer to rule 12 of the Income-tax Rules, 1962, and ITR-1 and ITR-4 say “Refer rules for eligibility”, so the rule governs where the heading is brief.
| Form | Who it is for (as printed on the form) |
|---|---|
| ITR-1 (Sahaj) | Individuals resident (other than not ordinarily resident) with total income up to Rs 50 lakh from salaries, two house properties, other sources (interest etc.), long-term capital gains under section 112A up to Rs 1.25 lakh and agricultural income up to Rs 5,000. Not for a director in a company, a person who has invested in unlisted equity shares, cases where TDS has been deducted under section 194N, cases where tax is deferred on ESOP, or a person with assets (including financial interest in any entity) outside India. |
| ITR-2 | Individuals and HUFs not having income from profits and gains of business or profession. |
| ITR-3 | Individuals and HUFs having income from profits and gains of business or profession. |
| ITR-4 (Sugam) | Resident individuals, HUFs and firms (other than LLP) with total income up to Rs 50 lakh, business or professional income computed under section 44AD, 44ADA or 44AE, and long-term capital gains under section 112A up to Rs 1.25 lakh. Not for a director in a company, a person who has invested in unlisted equity shares, cases where tax is deferred on ESOP, agricultural income above Rs 5,000, or assets (including financial interest in any entity) outside India. |
| ITR-5 | Persons other than individuals, HUFs, companies and persons filing ITR-7. |
| ITR-6 | Companies other than companies claiming exemption under section 11. |
| ITR-7 | Persons, including companies, required to furnish a return under section 139(4A), 139(4B), 139(4C) or 139(4D) only. |
The Main Eligibility Change: Two House Properties in ITR-1 and ITR-4
Notification No. 45/2026 amended rule 12(1)(a)(ii) and item (IG) of the proviso to rule 12(1)(ca), replacing “one house property” with “two house properties”. The house property schedule in both forms now asks for details “separately for each property for up to 2 properties”.
The schedule also carries a note that the maximum house property loss that can be set off is Rs 2,00,000. To carry forward and set off the loss, ITR-1 directs the taxpayer to ITR-2 and ITR-4 directs the taxpayer to ITR-3 or ITR-5.
Choosing the Tax Regime in the AY 2026-27 Return
For AY 2026-27 the regime choice is governed by section 115BAC of the 1961 Act. The new regime under section 115BAC(1A) is the default. Section 115BAC(6) provides two ways to opt out:
- Taxpayers with business or professional income: the option must be exercised on or before the due date under section 139(1). Once exercised, it applies to later years and can be withdrawn only once. The notes in ITR-3, ITR-4 and ITR-5 state that the old regime is chosen by filing Form 10-IEA on or before that due date.
- Taxpayers without business or professional income: the option is exercised along with the return under section 139(1) for that year. ITR-1 and ITR-2 ask directly whether the taxpayer wishes to exercise the option under section 115BAC(6), with “No” as the default.
An option exercised under the 1961 Act and in force immediately before 1 April 2026 is deemed exercised under the corresponding provision of the new Act (Section 536(2)(f); FAQ Q10.2 and Q10.5).
Due Dates and Time Limits for AY 2026-27
The Finance Act, 2026 substituted Explanation 2 to section 139(1) and section 139(5) of the 1961 Act with effect from 1 March 2026, adding the 31 August due date and extending the revised return window. These amended provisions govern AY 2026-27.
| Return or taxpayer | Provision (Income-tax Act, 1961) | Time limit for AY 2026-27 |
|---|---|---|
| Assessee to whom section 92E (transfer pricing report) applies, including partners of such a firm | Section 139(1), Explanation 2, Table item 1 | 30 November 2026 |
| Company; assessee whose accounts must be audited; partner of a firm whose accounts must be audited (section 92E not applying) | Section 139(1), Explanation 2, Table item 2 | 31 October 2026 |
| Assessee with business or professional income whose accounts need not be audited; partner of such a firm | Section 139(1), Explanation 2, Table item 3 | 31 August 2026 |
| Any other assessee | Section 139(1), Explanation 2, Table item 4 | 31 July 2026 |
| Belated return | Section 139(4) | 31 December 2026 (three months before the end of the assessment year) or before completion of assessment, whichever is earlier |
| Revised return | Section 139(5), subject to section 234-I | 31 March 2027 (end of the assessment year) or before completion of assessment, whichever is earlier |
| Updated return (ITR-U) | Section 139(8A) | Within 48 months from the end of the assessment year, that is, up to 31 March 2031 |
A return furnished after the section 139(1) due date attracts a fee under section 234F of Rs 5,000, limited to Rs 1,000 where total income does not exceed Rs 5 lakh. Section 234-I, inserted by the Finance Act, 2026, separately provides a fee of Rs 1,000 or Rs 5,000 (depending on the same Rs 5 lakh income test) for a revised return furnished within the window that section specifies.
Illustration: a salaried individual with no business income falls under item 4 and must file by 31 July 2026. A proprietor who declares income under section 44AD in ITR-4 and is not required to get accounts audited falls under item 3 and has until 31 August 2026. If either of them finds an error after filing, a revised return can be filed up to 31 March 2027, provided the assessment is not completed earlier.
Loss Returns
A loss under the head “Profits and gains of business or profession” or “Capital gains” can be carried forward only if the return of loss is furnished within the time allowed under section 139(1) (sections 139(3) and 80). Losses brought forward in this way remain usable after the repeal: Section 536(2)(m) allows house property, business, speculation business, specified business and race horse losses to be set off and carried forward against income computed under the new Act in the manner provided in sections 71B, 72, 73, 73A and 74A of the 1961 Act. Section 536(2)(n) does the same for capital gains losses under section 74, up to eight financial years after the year in which the loss was first computed.
Practical Points in the Transition Year
- Tax payments: self-assessment tax for FY 2025-26 is paid under section 140A of the 1961 Act even if paid in June or July 2026. Select AY 2026-27 on the challan. Advance tax for FY 2026-27 is paid by selecting Tax Year 2026-27 (FAQ Q2.22 and Q2.23). A wrong selection places the credit in the wrong year.
- Annual Information Statement: the AIS for AY 2026-27 reflects FY 2025-26 information under the 1961 Act. Information for Tax Year 2026-27 appears in Form No. 168 under the new Act (FAQ Q2.24 and Q6.28).
- Form 16: the salary TDS certificate for FY 2025-26 is Form 16 under the 1961 Act, due by 15 June 2026 (FAQ Q6.15).
- Verification: the notified ITR-V instructions state that where ITR-V is submitted within 30 days of electronic transmission, the transmission date is the date of furnishing the return. Where it is submitted later, the ITR-V submission date is treated as the date of furnishing and all consequences of late filing follow. The same instructions list e-verification through Aadhaar OTP, net banking, or EVC through a pre-validated bank or demat account or a bank ATM.
- No double filing now: the return for Tax Year 2026-27 falls due only after that year ends, and the CBDT FAQs state that its forms will be notified under the Income-tax Rules, 2026 (FAQ Q3.4 and Q3.12). The AY 2026-27 and Tax Year 2026-27 returns are independent obligations, and each must be filed by its own due date (FAQ Q3.20).
Common Mistakes to Avoid
- Quoting Income-tax Act, 2025 section numbers in AY 2026-27 schedules or working papers. The forms, deductions and TDS sections for FY 2025-26 are all under the 1961 Act.
- Treating 31 December 2026 as the last date for a revised return. After the Finance Act, 2026, section 139(5) runs to the end of the assessment year.
- Moving a taxpayer with two house properties to ITR-2 or ITR-3 only because of the property count, when ITR-1 or ITR-4 now covers two properties, subject to the other eligibility conditions.
- Filing a business taxpayer’s return in the old regime without a Form 10-IEA filed by the due date.
Related Posts
- Reassessment of pre-April 2026 years after the Income-tax Act, 2025
- Depreciation and unabsorbed depreciation for FY 2025-26
- Section 14A and Rule 8D in the FY 2025-26 tax audit
Need a Review of Your AY 2026-27 Return Position?
If you are filing a return for FY 2025-26 income, and want your form selection, regime choice or filing timeline reviewed, talk to an expert from the Tax Update India team.
Sources: Income-tax Act, 2025, section 536; Income-tax Act, 1961 as amended by the Finance Act, 2026, sections 115BAC, 139, 234F and 234-I; CBDT Notifications No. 45/2026 to 52/2026 dated 30 March 2026 (Income-tax (Second to Ninth Amendment) Rules, 2026); CBDT Corrigendum, Notification No. 57/2026 dated 10 April 2026; CBDT FAQs on Interplay and Transition from the Income Tax Act, 1961 to the Income Tax Act, 2025 (updated 2 April 2026).
Disclaimer: This article is for general information only and does not constitute legal or tax advice. Tax positions depend on the facts of each case. Section numbers refer to the Income-tax Act, 1961 unless otherwise stated. Consult a qualified professional before acting on any information here.