New ITR Forms for AY 2026-27: Your Compliance Checklist

What was actually notified

For AY 2026-27 the Central Board of Direct Taxes substituted fresh forms ITR-1 (SAHAJ) and ITR-4 (SUGAM) by Notification No. 45/2026. The notification carries each form itself, including the sentence that says who may use it. That eligibility sentence is the part worth reading closely.

One framing point before the detail: AY 2026-27 is the assessment year for FY 2025-26. The Income-tax Act, 1961 governs that year. The Income-tax Act, 2025 applies from 1 April 2026 onwards, which means tax year 2026-27, not AY 2026-27. A reader who is filing for AY 2026-27 is filing under the 1961 Act, and the form numbers in this article are the ones notified for that year.

ITR-1: the eligibility sentence

The form itself states its scope. ITR-1 is for individuals who are resident, other than not ordinarily resident, with total income up to ₹50 lakh, and whose income consists of salary, two house properties, other sources such as interest, long-term capital gains under section 112A up to ₹1.25 lakh, and agricultural income up to ₹5,000.

Four conditions in that sentence do the real work, and each of them disqualifies a filer who trips it:

• Residence: the form is for a resident who is not a not-ordinarily-resident. An RNOR does not fit the sentence, however small the income.
• The ₹50 lakh ceiling applies to total income, not to salary alone.
• The capital gains permitted are only long-term gains under section 112A, and only up to ₹1.25 lakh. Short-term gains, or gains on property, are outside the form.
• Agricultural income is capped at ₹5,000.

The form then lists who it is expressly not for: an individual who is a director in a company, who has invested in unlisted equity shares, in whose case tax has been deducted under section 194N, in whose case income-tax has been deferred on ESOPs, or who has assets — including a financial interest in any entity — located outside India.

That last exclusion needs care. The form's words are "assets (including financial interest in any entity) located outside India", and they turn on holding the asset: a financial interest in an entity abroad is named expressly, and the words do not refer to income arising from it. The header then says "Refer rules for eligibility", and the e-filing portal's help page for ITR-1 lists two further bars: signing authority in any account located outside India, and income from any source outside India.

Two house properties

The notification amended rule 12 of the Income-tax Rules, 1962 in two places, clause (a)(ii) and item (IG) of the proviso to clause (ca), replacing “one house property” with “two house properties”. This year's eligibility sentence permits two house properties, and the schedule beneath it says "fill up details separately for each property for up to 2 properties".

The practical effect is that a salaried filer with a self-occupied home and one let-out flat can use the form: the income is simple, the computation is simple, and the eligibility sentence does not stand in the way.

Two limits on that permission are worth stating plainly. First, it is for two properties, not for a portfolio; the schedule stops at two. Second, it affects which form may be used — it does not change how house property income is computed.

ITR-4: presumptive filers

ITR-4 carries its own eligibility sentence, and it is built for a different group: individuals, HUFs and firms other than LLPs, being resident, with total income up to ₹50 lakh, where income from business and profession is computed under section 44AD, 44ADA or 44AE, and where there are long-term capital gains under section 112A of up to ₹1.25 lakh.

The same permission reaches ITR-4 through the amendment to item (IG) of the proviso to rule 12(1)(ca), and ITR-4's house property schedule also says "for up to 2 properties". That matters most for a professional on section 44ADA who owns a home and lets out another — a combination whose computation the form already handles.

ITR-4's exclusion list differs from ITR-1's in two respects that are easy to miss. Agricultural income above ₹5,000 is an express exclusion here, and section 194N does not appear in ITR-4's list at all — that exclusion belongs to ITR-1 alone. What both lists share, for an individual, is the director, the holder of unlisted equity shares, the case where income-tax is deferred on ESOPs, and the person with assets outside India.

The exclusions both forms share

Read together, the two lists identify four situations common to both for an individual filer — a directorship in a company, unlisted equity shares, income-tax deferred on ESOPs, and assets outside India. Beyond those, section 194N TDS appears only in ITR-1's bracket list, and the ₹5,000 agricultural limit sits in ITR-1's scope sentence as well as in ITR-4's bracket list, so both forms exclude a filer whose agricultural income exceeds it. Where any of these applies, the eligibility sentence is not satisfied and the form should not be used.

The one that needs care is unlisted equity shares. Each form excludes an individual who "has invested in unlisted equity shares"; the test turns on those words, not on the size of the holding.

Tenant details: the rule behind the field

The house property schedule carries a note that filers notice at the point of entry, and it draws a distinction that is easy to read past: furnishing the PAN or Aadhaar number of the tenant is mandatory where tax has been deducted under section 194-IB, while furnishing the TAN of the tenant is mandatory where tax has been deducted under section 194-I.

Two things follow. The obligation is conditional on a deduction having been made; it is not a universal requirement to produce a tenant's identifier for every let-out property. And the identifier the schedule asks for follows the provision under which the tax was deducted, so the two fields are not interchangeable.

For a landlord the practical point runs against the instinct, because the identifier the return demands is the tenant's, not the landlord's. A landlord whose tenant deducted under section 194-IB should expect the return to require that tenant's PAN or Aadhaar; one whose tenant deducted under section 194-I should expect the tenant's TAN to be required. Where the identifier cannot be obtained, the difficulty starts before the return is filed, because the field is mandatory once the deduction has been made.

The ₹2 lakh house property ceiling

The form's own instructions record the ceiling that applies when the house property computation produces a loss: the maximum loss from house property that can be set off is ₹2,00,000.

The instruction goes further than the ceiling: to avail the benefit of carry forward and set off of the loss, it directs the filer to a different form — ITR-2 in the case of an ITR-1 filer, and ITR-3 or ITR-5 in the case of an ITR-4 filer.

That is what makes the two-property permission less generous than it first appears. A filer with two properties and interest on two loans may find the aggregate computation comfortably within the form but well beyond the set-off ceiling, so the extra property is reported in full while the loss relief stays capped — and carrying the balance forward takes a form the filer did not choose.

80G and 80GGC are separate rows

Both forms carry section 80G and section 80GGC in separate deduction rows. In ITR-4 the table labels them C13 and C15, each on its own line; in ITR-1 the deduction table carries 80G and 80GGC as separate columns and uses no C-numbering of this kind.

So a claim under either section goes in its own row, on whichever form is used, and that row is filled in the e-filing utility. The C numbers are ITR-4's alone, which matters when a filer describes the row to someone using the other form.

What these forms do not change

The substitution of forms is not a change in the law of computation. House property income is still worked out property by property in the same schedule; the ₹2,00,000 set-off ceiling still applies to the aggregate loss; the section 112A threshold is ₹1.25 lakh for the year; and the exclusion for assets outside India still applies to a holding of any size. The filer this permission helps is the one with simple income and a second property. A filer with an unlisted shareholding, a directorship or a foreign account is not helped at all, because those exclusions still apply.

It is also worth separating two questions that the form's layout tends to merge: whether a property must be reported, and whether its loss can be set off. The answer to the first is yes, in the schedule. The answer to the second is subject to the ceiling. Reporting a property you cannot get relief on is still reporting it correctly.

A form-selection sequence for this season

• Fix total income for FY 2025-26 before choosing a form, because the ₹50 lakh ceiling is tested on the total, not on salary.
• Test residence and RNOR status, since ITR-1 excludes a not-ordinarily-resident.
• Count house properties. Two is permitted in both ITR-1 and ITR-4; a third ends the inquiry.
• Test the section 112A capital gains figure against ₹1.25 lakh and check that no other capital gain exists.
• Run the exclusion list: directorship, unlisted shares, ESOP deferral and foreign assets for an individual under both forms, plus, for ITR-1, the portal's bars on foreign signing authority and foreign-source income, section 194N TDS in ITR-1's bracket list, and agricultural income above ₹5,000 — a limit stated in ITR-1's scope sentence and in ITR-4's bracket list, so it excludes a filer from both.
• Only then fill the schedules, and keep the tenant's PAN or Aadhaar where section 194-IB tax was deducted, or the tenant's TAN where the deduction was under section 194-I.

Mistakes to avoid

Three mistakes are worth avoiding. The first is choosing the shorter form on the basis of salary alone and overlooking the foreign-asset exclusion. The second is treating the two-property permission as a permission to ignore the ₹2 lakh set-off ceiling; the form gets easier, the tax does not. The third is treating the 80G and 80GGC rows as one, when each form carries them as separate rows.

What matters is who fits: two house properties, clearly stated.

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See Also

• How to Get Your Income Tax Refund — Section 237, TDS Credit, and Section 244A Interest
• Late ITR Filing Penalty for AY 2026-27 — Section 234F, 234A, and 234B Explained
• Can I File ITR Without Form 16? — Complete Guide for AY 2026-27

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