What employees need to know about ITR filing for FY 25-26
 

Income Tax Return (ITR) filing is a cornerstone of financial compliance in India. For individuals, it is not only a statutory requirement but also a reflection of financial discipline. Filing a return on time ensures smooth processing of refunds, helps avoid penalties, and builds a transparent financial record useful for loans, visas, and investments.

With the financial year 25-26 having ended on 31 March 2026, taxpayers must file their returns within the prescribed deadlines. This article provides an overview, specifically for employees, of the changes in ITR forms, due dates, and key points to remember while filing the ITR.

Key changes in ITR forms

  ITR-1 (Sahaj)

• A salaried taxpayer can now file ITR-1 if:-
  • There are Long Term Capital Gains (LTCG) from listed shares or equity mutual funds less than or equal to INR 0.125 million provided there is no brought-forward or carry-forward loss under the capital gains head. (In previous years, ITR-2 needed to be filed if there was LTCG)
  • There is income from 2 house properties (In previous years, ITR-1 was filed only when there was income from 1 house property)
• In the section of 'Income from house property':-
  • There are Long Term Capital Gains (LTCG) from listed shares or equity mutual funds less than or equal to INR 0.125 million provided there is no brought-forward or carry-forward loss under the capital gains head. (In previous years, ITR-2 needed to be filed if there was LTCG)
  • There is income from 2 house properties (In previous years, ITR-1 was filed only when there was income from 1 house property)

  ITR-2

• Split of capital gains into 'before 23 July 2024' and 'on or after 23 July 2024' has been removed
• For reporting donations under Section 80G, the reference number and IFSC of the donee need to be reported.
• For reporting political donations under section 80GGC, the name and PAN of the political party need to be reported.

Selection of the ITR form

Description	ITR-1	ITR-2
Taxpayer	Resident individuals	Resident or Non-Resident individuals and HUFs
Director in company	Not eligible	Eligible
Total income	Up to INR 5 million	More than INR 5 million
Income from house property	Up to 2 houses	More than 2 houses
Capital gains income	Long Term Capital Gains (LTCG) from listed shares or equity mutual funds up to INR 0.125 million subject to conditions	All capital gains and losses
Income from other sources	Excluding income from activities like horse racing, gambling, lotteries, etc.	Including all activities
Agriculture income	Up to INR 5,000	More than INR 5,000

 

Due dates and timelines

Description	Due date for filing	Consequences for not filing within due date
Normal Return of Income (ROI)	31 July 2026	Penalty INR 5000 if income > INR 0.5 million Penalty INR 1000 if income <= INR 0.5 million Interest under section 234A No carry forward of losses No Option to Opt for Old Tax Regime Delay in receiving refunds
Belated Return of Income (when ROI is not filed within due date)	31 December 2026	With penalty as above
Revised Return of Income (to make any correction in the ROI)	31 March 2027	With additional penalty as above if filed after 31 December 2026

 

Key points to remember while filing ITR

• The new tax regime is the default tax regime.
• While filing ITR-1 or ITR-2, a simple tick 'Opting out of New Regime' is required to opt for 'Old tax regime' without filing a separate form 10IEA.
• Download AIS and form 26AS. Check the same against the actual TDS/TCS paid.
• Compile all the documents (bank statements, Form 16, interest certificates, investment proofs) and carefully fill in the information in the ITR.
• The option of category 'Others' for claiming exemptions under section 10 has been removed. Only specifically listed allowances can be claimed.