Big Tax Update: ITR-1 Now Allows Reporting Income From Two House Properties

The Central Board of Direct Taxes (CBDT) has officially launched the income tax return (ITR) filing season for Assessment Year (AY) 2026-27, notifying all seven ITR forms along with the verification (ITR-V) and updated-return (ITR-U) forms. Individuals, pensioners, professionals, and other taxpayers can now begin filing their returns for income earned in FY 2025-26, with the due date for non-audit cases set at July 31, 2026, unless extended.

A key change this year affects salaried taxpayers: ITR-1 (Sahaj) can now accommodate income from up to two house properties. Previously, having a second house would require taxpayers to file ITR-2 or ITR-3. The relaxation allows those with, for instance, one self-occupied home and one let-out property to continue using the simpler ITR-1 form, provided their total income falls within the prescribed monetary limit. ITR-1 remains suitable for resident individuals with income primarily from salary or pension, income from up to two house properties, and other sources such as bank interest and family pension.

However, ITR-1 cannot be used in several situations, including cases involving profits or gains from business or profession, short- or long-term capital gains beyond specified thresholds, house-property losses carried forward, lottery or racehorse winnings, income taxed at special rates, or foreign assets and income. Taxpayers falling into these categories must use ITR-2 or higher forms. ITR-2, for instance, covers individuals and Hindu Undivided Families (HUFs) with multiple house properties, capital gains, foreign assets, agricultural income above ₹5,000, or NRI/RNOR status, provided they have no business income.

Also Read: Shivraj Singh Chouhan Clears Major MP Agricultural Proposals to Secure Farmers’ Income

For those earning from business or profession, ITR-3 and ITR-4 (Sugam) are applicable, depending on whether the taxpayer follows normal or presumptive taxation. ITR-5, ITR-6, and ITR-7 cater to firms, LLPs, companies, trusts, political parties, and other institutions, each with specific filing requirements. The updated forms ITR-V and ITR-U continue to facilitate acknowledgement and corrections, with ITR-U allowing taxpayers to file revised returns within 48 months from the end of the relevant assessment year by paying any additional tax due.

Experts say the new provision for two house properties in ITR-1 is expected to simplify filing for many salaried or pensioner taxpayers, reducing the need to switch to more complex forms unnecessarily. Taxpayers are advised to review their income sources carefully and select the correct form to ensure compliance and avoid errors.

With these notifications, the CBDT has aimed to streamline the filing process and accommodate evolving taxpayer needs, particularly in an era of growing property holdings and diversified income sources. Early filing is encouraged to allow sufficient time for verification and corrections, ensuring a smooth tax season for 2026.

Also Read: Nepali Citizens in West Asia Update Online Registration Amid Rising Tensions