Filing your Income Tax Return for FY 2025-26 but confused about which ITR form applies to you? This guide is fully updated with the latest changes — including the landmark Budget 2025 zero-tax benefit, and the major ITR form eligibility changes for AY 2026-27.
🏛️ Budget 2025 — The Big Changes
Budget 2025 brought the most significant tax relief in a decade: Zero income tax up to ₹12 lakh under the New Tax Regime. With the standard deduction of ₹75,000 (increased from ₹50,000), salaried employees with income up to ₹12,75,000 pay zero tax.
New Tax Regime Slabs (FY 2025-26 onwards):
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
NPS employer contribution deduction increased from 10% to 14% of basic salary under the New Tax Regime.
Capital gains rates revised (effective July 23, 2024): LTCG on listed equity and equity mutual funds increased from 10% to 12.5%. STCG increased from 15% to 20%.
Not sure how these changes impact your tax liability? Use our free Income Tax Calculator to estimate your tax in seconds.
🏛️ Budget 2026 — Key Updates
New Income Tax Act 2025 effective from 1 April 2026 — replaces the Income Tax Act 1961 entirely. “Financial Year” and “Assessment Year” replaced by a single term: “Tax Year”.
Extended ITR Due Dates (AY 2026-27 onwards):
| ITR Form | Taxpayer Type | Due Date |
|---|---|---|
| ITR-1 & ITR-2 | Salaried / Capital Gains | 31st July 2026 |
| ITR-3 & ITR-4 | Non-audit business / Freelancers | 31st August 2026 (new) |
| Audit cases | Companies, LLPs | 31st October 2026 |
| Revised Return | Fee applies after December | 31st March 2027 (new) |
STT on futures increased from 0.02% to 0.05%. Buyback taxation — share buybacks now taxed as capital gains. Foreign Asset Disclosure Scheme 2026 — one-time 6-month window for NRIs and young professionals.
📋 Which ITR Form For You? — AY 2026-27 Updated Eligibility
✅ ITR-1 (Sahaj) — Now Expanded
You can file ITR-1 if:
- Income from salary, pension, up to two house properties, and interest (new — previously only one house property)
- Total income below ₹50 lakhs
- LTCG under Section 112A up to ₹1,25,000 from listed equity or equity mutual funds (new — previously any LTCG required ITR-2)
- No capital losses to carry forward
- Not a director in any company, no foreign assets
Cannot use ITR-1 if: LTCG exceeds ₹1,25,000 | You have any STCG | Capital losses to carry forward | Three or more house properties | Agricultural income exceeds ₹5,000
✅ ITR-4 (Sugam) — Also Expanded
Presumptive income under Section 44AD, 44ADA, or 44AE with total income below ₹50 lakhs. Now also allows LTCG up to ₹1,25,000 and income from up to two house properties.
New deadline: 31st August 2026 (extended under Budget 2026)
✅ ITR-2 — For Complex Situations
Use ITR-2 if: LTCG exceeds ₹1,25,000 | You have any STCG | Capital losses to carry forward | Three or more house properties | Foreign assets | Income above ₹50 lakhs | Director in a company.
✅ ITR-3 — For Business Owners and Freelancers
Income from business, freelancing, consulting, or professional practice with regular books of accounts. New deadline: 31st August 2026. Read our Complete Guide to Business Setup in India.
✅ ITR-5 — For LLPs and Firms
All LLPs, Partnership Firms, AOPs, and BOIs file ITR-5. Read our LLP Compliance Requirements Guide.
✅ ITR-6 — For Companies
All companies except those claiming exemption under Section 11. Download our Annual Compliance Calendar for Companies 2025.
🔑 Summary of Key Changes for AY 2026-27
| Change | Impact |
|---|---|
| LTCG up to ₹1.25L now allowed in ITR-1 & ITR-4 | Crores of small investors can use simpler forms |
| Two house properties now allowed in ITR-1 & ITR-4 | Property owners no longer forced to file ITR-2 |
| ITR-3 & ITR-4 due date extended to 31st August | More time for freelancers and small businesses |
| Revised return until 31st March 2027 | Extended window (fee applies after December) |
| New Income Tax Act 2025 in force | “FY/AY” replaced by “Tax Year” |
| LTCG rate 12.5%, STCG rate 20% | Higher capital gains tax vs earlier rates |
⚠️ Common Mistakes to Avoid in FY 2025-26
- Filing ITR-1 despite LTCG above ₹1,25,000 — switch to ITR-2
- Filing ITR-1 despite having any STCG — STCG always requires ITR-2
- Applying old LTCG rate of 10% — rate is now 12.5% since July 23, 2024
- Thinking ITR-3/4 deadline is 31st July — it is 31st August 2026 now
- Not reconciling Form 26AS, AIS, and TIS before filing — mismatches trigger notices
- Missing capital losses — if you have losses to carry forward, ITR-1/4 not allowed
Old vs New Tax Regime — Which to Choose?
The New Tax Regime is the default for FY 2025-26. To opt for the Old Regime, actively choose it while filing.
New Regime better if: Income below ₹12,75,000 (zero tax) or few deductions available.
Old Regime better if: Heavy 80C investments, HRA, and home loan interest — total deductions exceed ₹3.75 lakhs.
The right regime depends on your exact income and deductions. Our team at CA Vijay Singh & Co. calculates this comparison for every client before filing.
Need Help Filing Your ITR?
At CA Vijay Singh & Co., we have filed 450+ ITRs for salaried professionals, NRIs, business owners, and freelancers across India. Our tax and compliance services ensure correct ITR form selection, maximum deductions, full Form 26AS/AIS/TIS reconciliation, and on-time filing within new deadlines.
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📞 Contact CA Vijay Singh & Co.
CA Vijay Singh is a Fellow Member of ICAI with 12+ years of experience in taxation and compliance. Based in Andheri East, Mumbai — serving clients across India and abroad.
