ITR-2 Major Changes for AY 2026–27 vs AY 2025–26

The Income Tax Return (ITR) forms in India are updated regularly to improve transparency, accuracy, and compliance. For the Assessment Year (AY) 2026–27, the government has introduced several important changes in ITR-2, which is used by individuals and Hindu Undivided Families (HUFs) who do not have business or professional income.

What is ITR-2 and Who Should Use It?

ITR-2 is applicable for taxpayers who:

• Earn salary or pension
• Have income from multiple house properties
• Earn capital gains (like from shares or property)
• Have foreign income or assets

It is not meant for business owners (they use ITR-3 or ITR-4).

1. Introduction of Representative Assessee Details

Then:

• Limited or less structured reporting

Now:

• A dedicated section asking:
  • Whether return is filed by a representative
  • Name, contact details, and PAN/Aadhaar of representative

Why it matters:

Useful in cases like:

• Filing on behalf of someone else
• Legal heirs filing for deceased individuals

This improves accountability and tracking.

3. Enhanced Reporting Under Section 139(1) Conditions

Then:

• Basic disclosure of certain high-value transactions

Now:

More structured and detailed reporting for:

• Deposits above ₹1 crore in current accounts
• Foreign travel expenses above ₹2 lakh
• Electricity expenses above ₹1 lakh
• Additional prescribed conditions

Why it matters:

Even if your income is below taxable limits, you may still need to file returns if you meet these conditions.

4. More Detailed Residential Status Classification

Then:

• Basic selection of residential status

Now:

• Expanded categories with detailed conditions such as:
  • Stay duration in India
  • Income thresholds (₹15 lakh rule)
  • Special provisions for Indian citizens and persons of Indian origin

Why it matters:

Your residential status affects:

• Taxability of foreign income
• Overall tax liability

5. Improved Disclosure for Directors and Shareholders

Then:

• Basic disclosure requirements

Now:

More detailed reporting if:

• You are a director in a company
• You hold unlisted equity shares

You must provide:

• Company details
• PAN
• Shareholding movement (opening, acquisition, transfer, closing)

Why it matters:

This enhances transparency and helps track high-value investments.

6. More Structured Salary Reporting

Then:

• Multiple detailed salary components including foreign retirement accounts

Now:

• Still detailed but better structured and easier to follow
• Includes:
  • Salary
  • Perquisites
  • Retirement account income (Section 89A)

Why it matters:

Helps reduce confusion for salaried individuals with complex income structures.

7. Expanded House Property Reporting

Then:

• Basic reporting of property details

Now:

• More detailed fields including:
  • Property address
  • Co-ownership details
  • Income calculations

Why it matters:

Ensures accurate reporting of rental income and deductions.

Conclusion

The changes in ITR-2 for AY 2026–27 clearly show a shift toward:

• Greater transparency
• Detailed reporting
• Improved compliance tracking

While this may seem overwhelming at first, most changes are designed to:

• Reduce errors
• Improve accuracy
• Prevent tax evasion

Practical Tip:

If your financial situation involves:

• Multiple properties
• Investments in shares
• Foreign income

It is advisable to carefully review the new form or consult a tax expert before filing.