Major Changes in ITR-1 (Sahaj) and ITR-4 (Sugam) for AY 2026–27

The Income Tax Return (ITR) forms are updated almost every year to reflect new rules, simplify compliance, and improve reporting accuracy. For the Assessment Year (AY) 2026–27, significant changes have been introduced in ITR-1 (Sahaj) and ITR-4 (Sugam) under the Income-tax (Second Amendment) Rules, 2026. If you are a salaried individual, small business owner, or freelancer, understanding these updates is essential to avoid mistakes while filing your return.

1. You Can Now Report Two House Properties

One of the biggest changes is related to house property reporting. Previously, both ITR-1 and ITR-4 allowed taxpayers to declare income from only one house property. Now, you can report up to two house properties.

This is a major relief for individuals who:

• Own more than one house
• Earn rental income from multiple properties

Additionally, the reporting structure has become more detailed. You now need to provide:

• Co-ownership percentage
• Tenant details like PAN/TAN
• Information about unrealised rent

While this adds complexity, it improves transparency and accuracy.

2. More Detailed Contact and Address Information

Earlier, taxpayers could enter:

• One mobile number
• One email address
• One address

Now, the forms allow:

• Primary and secondary mobile numbers
• Primary and secondary email addresses
• Two address blocks

This change ensures better communication from the tax department and reduces the chances of missing important updates.

3. Introduction of “Representative Assessee” Field

A new section has been added where you must specify whether the return is being filed by a representative assessee.

If someone else is filing your return (for example, in case of:

• Minors
• Deceased individuals
• Legal representatives

You now need to provide:

• Name
• Email
• Contact details

This enhances accountability and clarity in filings.

4. Simplification of Salary Reporting

The salary section has been simplified by reducing the number of sub-items.

Previously:

• There were 5 sub-fields, including details related to foreign retirement accounts under Section 89A

Now:

• Only 3 sub-fields remain

This makes the form easier to fill, especially for salaried individuals who do not deal with complex international tax scenarios.

5. Improved Reporting of Capital Gains (LTCG under Section 112A)

Earlier, long-term capital gains (LTCG) under Section 112A were reported in a vague or indirect way.

Now, a dedicated section has been introduced requiring:

1. Total sale consideration
2. Cost of acquisition
3. LTCG amount

This change improves clarity and ensures proper calculation of tax liability. It also reduces the chances of incorrect reporting.

6. Updated Gross Total Income Calculation

The formula for calculating Gross Total Income has been modified.

Now, it includes LTCG under Section 112A directly in the computation. This ensures:

• Better alignment with actual income sources
• More accurate tax calculations

7. New Fee for Revised Returns (Section 234-I)

A new provision has been added for taxpayers who file a revised return.

You may now have to pay a fee under Section 234-I, which will be:

• Clearly shown in the form
• Automatically added to the total tax calculation

This encourages taxpayers to file accurate returns the first time.

8. TDS Reporting Has Been Split into Two Sections

Earlier, there was a single TDS schedule combining:

• Salary TDS
• Non-salary TDS

Now, it has been split into:

• TDS-1 (Salary)
• TDS-2 (Non-salary)

The non-salary section is more detailed and includes additional columns such as:

• Unclaimed TDS brought forward

This change improves tracking and reduces confusion.

9. Changes Specific to ITR-4 (Sugam)

ITR-4, which is used by small businesses and professionals under presumptive taxation, has a few additional updates:

a) More Detailed Tax Regime Selection

The old simple Yes/No option has been replaced with a decision tree. You now need to:

• Confirm whether you opted for the new tax regime earlier
• Provide acknowledgment details

This ensures consistency in tax regime selection.

b) Additional Compliance Condition

A new condition has been added under Section 139(1), including:

• Deposit of ₹1 crore or more in a current account

This is especially relevant for business taxpayers.

c) Bank Account Details Integrated

Bank details are no longer in a separate section. They are now:

• Integrated into the tax computation section

This streamlines the form structure.

Conclusion

The changes in ITR-1 and ITR-4 for AY 2026–27 aim to strike a balance between better transparency and user convenience. While some sections have become more detailed, others have been simplified to reduce confusion.

Key Takeaways:

• You can now report two house properties
• Capital gains reporting is more structured
• TDS details are clearer with separate sections
• New compliance requirements have been introduced

If you are filing your return this year, take time to review these changes carefully. Even small errors can lead to notices or delays in processing. When in doubt, consulting a tax professional is always a good idea.

By understanding these updates, you can ensure a smoother and more accurate tax filing experience.