New Income Tax Rules 2026 Effective April 1: Major Changes in ITR Forms 1–7

India plans to overhaul its income tax system by implementing the new Income Tax Act, 2025, starting April 1, 2026, replacing the current law from 1961 The draft Income Tax Rules 2026 introduce significant changes to ITR forms 1 to 7, focusing on online filing and stricter compliance.

Public feedback on the draft rules is invited until February 22, 2026, with input sought from taxpayers, chartered accountants, and professionals to finalize the regulations

ITR-1, or the Sahaj Form, remains the simplest, designed for residents with straightforward income sources like salary and bank interest Most taxpayers will now need to file returns digitally, except for super senior citizens.

ITR-2 becomes the default choice for more complex tax situations, such as capital gains and foreign assets This form now requires additional details due to tighter monitoring of such income categories.

ITR-3 focuses on business or professional income, with increased disclosure requirements for perquisites and special income categories Taxpayers exceeding presumptive taxation limits must file ITR-3.

ITR-4 (Sugam) faces the most stringent changes, restricting use to those without foreign income, directorships, or extensive assets This could impact small businesses and professionals who may need to switch to ITR-3.

ITR-5 and ITR-6 maintain their structure but demand digital compliance and enhanced data linking, with digital signatures required for companies

ITR-7, used by charitable trusts and political parties, emphasizes transparency, mandating detailed reporting on donations and fund usage to ensure tax-exempt institutions are closely monitored

The article serves as general information and advises consulting a Chartered Accountant or tax expert before making tax decisions, as final regulations may change

For additional insights, readers are directed to explore details on the Union Budget 2026, examining who stands to benefit from the new financial policies