ITR-2 Activated on Income Tax Portal for AY 2026-27 Filing

The Income Tax Return (ITR) filing season for Assessment Year (AY) 2026-27 has officially gained momentum. The Income Tax Department has now enabled both online filing and Excel Utility for ITR-2 on the e-Filing portal, allowing eligible taxpayers to start filing returns for Financial Year (FY) 2025-26.

Earlier, the department had already activated ITR-1 (Sahaj) and ITR-4 (Sugam) filing utilities from 15 May 2026. With the release of ITR-2, taxpayers having capital gains, multiple house properties, foreign income, or other complex income structures can now proceed with return filing.

Who Should File ITR-2?

ITR-2 is applicable for Individuals and HUFs who do not have income from business or profession but have income from sources such as:

  • Salary or pension
  • More than one house property
  • Capital gains from shares, mutual funds, property etc.
  • Foreign assets or foreign income
  • Agricultural income exceeding ₹5,000
  • Income exceeding ₹50 lakh
  • Directors in companies
  • Investment in unlisted equity shares

Taxpayers having business or professional income are required to file ITR-3 instead.

Major Highlights of AY 2026-27 ITR Filing

Some important updates noticed in ITR-2 for AY 2026-27 include:

  • Simplified reporting structure
  • Revised capital gains reporting
  • Additional disclosure requirements for deductions under Sections 80G and 80GGC
  • Streamlined representative assessee details
  • New reporting fields linked with revised return filing provisions

The updated utility also reflects changes introduced after recent amendments in capital gains taxation.

Online Filing and Excel Utility Both Available

Taxpayers can now choose either:

  • Online filing mode directly on the portal, or
  • Offline Excel Utility for preparing and uploading JSON files

The official Income Tax portal has confirmed that ITR-2 utilities are now live for AY 2026-27.

Important Advice Before Filing

Although utilities are now available, taxpayers should avoid rushing to file returns immediately without proper reconciliation.

Before filing:

  • verify AIS and Form 26AS,
  • check TDS entries,
  • reconcile capital gains,
  • confirm interest income,
  • and review prefilled information carefully.

Experts are also advising taxpayers to wait until all TDS and financial information gets fully reflected in AIS and Form 26AS to avoid mismatch notices or defective returns.

Due Date for Filing ITR-2

For most non-audit taxpayers, the due date for filing ITR-2 for AY 2026-27 is expected to be 31 July 2026 unless extended by the government.

Taxpayers can access the filing utilities through the official Income Tax e-Filing portal:

Income Tax e-Filing Portal

Key Updates in ITR Forms (ITR-1, ITR-2, ITR-3, ITR-4) for AY 2026–27

For the Financial Year 2025–26, Income Tax Returns will be filed in 2026 as per the prescribed due dates. The government has already notified the updated ITR forms for Assessment Year 2026–27, incorporating several key changes to enhance transparency, ensure better compliance, and improve the accuracy of financial reporting.

ITR Form Formats / Templates

 

 

Income Tax Changes Announced in Union Budget 2026

Direct Tax Proposals in Budget 2026 – Key Highlights

In Union Budget 2026, the Government has announced a wide-ranging and future-oriented set of Direct Tax reforms aimed at simplifying tax laws, reducing disputes, improving compliance, and enhancing India’s appeal as a global investment destination. These measures signal a decisive shift from a complex, enforcement-driven regime to a trust-based, technology-enabled, and taxpayer-friendly tax system, aligned with the vision of Viksit Bharat.

1. New Income-tax Act, 2025 – A Structural Overhaul

One of the most significant announcements in Budget 2026 is the replacement of the Income-tax Act, 1961 with the Income-tax Act, 2025, effective from 1 April 2026.

The new legislation is designed to:

  • Be substantially shorter and simpler, with fewer sections and chapters

  • Use clear and unambiguous language to minimise interpretational disputes

  • Be easier for taxpayers and tax authorities to understand and implement

Simplified Income-tax Rules and redesigned return forms will be notified shortly, enabling individuals to comply without professional assistance.

2. Taxpayer Relief & Ease of Living Measures

The Budget introduces multiple measures to address long-standing taxpayer concerns:

MACT Interest Exemption

  • Interest awarded by the Motor Accident Claims Tribunal (MACT) to individuals will be fully exempt from tax.

  • No TDS will apply, irrespective of the amount received.

Rationalisation of TCS under LRS

  • TCS on overseas tour packages reduced to 2% (from 5% / 20%), without any threshold.

  • TCS on education and medical remittances under LRS reduced from 5% to 2%.

Clarity on TDS for Manpower Supply

  • Manpower supply services classified as contractor payments.

  • TDS rate capped at 1% / 2%, eliminating ambiguity and litigation.

Automated Lower / Nil TDS Certificates

  • Eligible small taxpayers can obtain lower or nil TDS certificates through an automated, rule-based system without Assessing Officer interaction.

Simplification of Form 15G / 15H

  • Depositories authorised to accept declarations centrally and share them with multiple companies, reducing repetitive filings.

3. Rationalised Return Filing Timelines

To ease compliance pressure:

  • Belated and revised returns can now be filed up to 31 March (earlier 31 December) on payment of a nominal fee.

  • Staggered ITR due dates introduced:

    • ITR-1 & ITR-2 (Individuals): 31 July

    • Non-audit cases and trusts: 31 August

4. Relief for Property Transactions Involving NRIs

For purchase of immovable property from a non-resident:

  • Resident buyers are no longer required to obtain a TAN.

  • TDS can be deposited using a PAN-based challan, similar to resident transactions.

5. One-Time Foreign Asset Disclosure Scheme (FAST-DS, 2026)

A special 6-month disclosure window has been introduced for genuine hardship cases involving small taxpayers.

Category A

  • Undisclosed foreign income / assets up to ₹1 crore

  • Payment of:

    • 30% tax

    • 30% additional tax (in lieu of penalty)

  • Immunity from prosecution granted

Category B

  • Foreign assets up to ₹5 crore

  • One-time fee of ₹1 lakh

  • Full immunity from penalty and prosecution

Immunity from prosecution is also retrospectively extended for non-immovable foreign assets up to ₹20 lakh.

6. Rationalisation of Penalty & Prosecution Regime

Key reforms include:

  • Assessment and penalty proceedings to be concluded through a single consolidated order

  • No interest on penalty amounts during pendency of first appeal

  • Pre-deposit for appeal reduced from 20% to 10%, limited to core tax demand

Updated Returns Post Reassessment

  • Taxpayers can file updated returns even after reassessment initiation by paying an additional 10% tax.

Penalty to Fee Conversion

  • Certain technical defaults (audit, TP report, SFT) converted into fee-based non-criminal defaults.

Decriminalisation Measures

  • Minor offences punishable only with fines

  • Maximum imprisonment reduced to two years

  • Penalties graded based on tax evasion quantum

7. Targeted Tax Relief for Cooperatives

  • Deduction extended to supply of cattle feed and cotton seed by primary cooperatives

  • Inter-cooperative dividend income allowed as deduction under the new tax regime

  • Three-year dividend exemption for notified national cooperative federations, subject to redistribution

8. IT Sector Boost & Transfer Pricing Certainty

  • IT and IT-enabled services consolidated under “Information Technology Services”

  • Uniform safe harbour margin of 15.5%

  • Threshold enhanced from ₹300 crore to ₹2,000 crore

  • Automated safe harbour approvals valid for 5 years

  • Fast-track unilateral APA with targeted 2-year resolution

9. Measures to Attract Global Business & Talent

  • Tax holiday till 2047 for foreign cloud service providers using Indian data centres

  • 15% safe harbour margin for data-centre support entities

  • 5-year tax exemption for non-residents supplying capital goods to bonded zone manufacturers

  • Exemption of global income for foreign experts residing in India up to 5 years

  • MAT exemption for non-residents taxed on presumptive basis

10. Tax Administration Reforms

  • ICDS to be merged with Ind-AS from FY 2027-28

  • Definition of “accountant” rationalised to support global expansion of Indian advisory firms

11. Other Key Direct Tax Measures

  • Buyback taxation shifted to capital gains for all shareholders

  • Additional tax for promoters to prevent arbitrage

  • TCS on liquor, scrap and minerals reduced to 2%; tendu leaves from 5% to 2%

  • STT increased on futures and options

  • MAT to become final tax from 1 April 2026, rate reduced to 14%, with limited MAT credit set-off

Conclusion

The Direct Tax proposals in Budget 2026 mark a bold move towards simplicity, certainty, and trust-based taxation. With a new Income-tax Act, substantial compliance relief, rationalised penalties, and strong incentives for investment and global integration, the reforms aim to strike a balance between revenue mobilisation and taxpayer confidence, supporting long-term economic growth.