ITR Filing AY 2026-27: Deadline July 31, Which Form, and What Changed

Published 11 July 2026 · Tax & Salary

Sneha works at an MNC in Bengaluru, earns ₹14.7 lakh, and has had her TDS handled by payroll for six years. She has never looked at her AIS. This July, it shows ₹1,14,000 in short-term capital gains from switching mutual fund schemes in March — income her employer never knew about, taxed at 20%, and completely absent from the ₹92,820 her company deducted.

The deadline to declare all of it — salary, STCG, dividends, every rupee — is July 31, 2026.

AY 2026-27: What Period Does This Return Cover?

Assessment Year 2026-27 covers income earned during Financial Year 2025-26 — April 1, 2025 to March 31, 2026. Think of FY as the year you play the match, AY as the year the scorecard is officially submitted.

This return is filed under the Income Tax Act, 1961. The new Income Tax Act 2025 — the one replacing the 1961 Act entirely — applies from FY 2026-27. Everything you file this July uses old rules, old sections, old slabs. The change hasn't arrived yet.

Three things changed versus last year's return: ITR-1 now covers two house properties (was one). The new default regime has been in place since April 2023, so your employer defaulted to it unless you actively opted out. And capital gains tax rates shifted in Budget 2024 — STCG at 20%, LTCG at 12.5% above ₹1.25L — those apply to everything redeemed or sold during FY 2025-26.

Who Must File — and Who Can Skip

You must file if total income before deductions exceeds ₹2.5 lakh (old regime) or ₹3 lakh (new regime). But "total income" here includes more than your salary. Any dividends, any capital gains from redeeming mutual funds, any rental income, any freelance payment above ₹30,000 where TDS was deducted — all of it counts.

Filing is also mandatory — regardless of income amount — if you deposited ₹1 crore or more in a current account during FY 2025-26, spent ₹2 lakh or more on international travel, or hold any foreign assets or foreign bank accounts. The IT department flags these automatically through AIS.

Even if TDS covered everything and you owe zero additional tax, file anyway. Banks ask for ITR acknowledgements for home loans. Visa applications need them. Some foreign remittance banks now ask for three years of ITR. Filing when you don't legally have to costs nothing. Not filing when you should have costs ₹5,000 under Section 234F — plus interest under Section 234A at 1% per month on any unpaid tax.

Which ITR Form: The Quickest Way to Know

Start here: did you trade F&O (futures and options) at any point during FY 2025-26? Even a single lot, bought and sold, classifies you as having business income under Section 43(5). You need ITR-3. Skip ITR-2. Skip ITR-1. This is non-negotiable — the department gets transaction-level data from exchanges.

No F&O? Next: did you have capital gains from stocks or mutual funds? Or income from more than two house properties? Or total income above ₹50 lakh? Any foreign asset? Director of a company? If yes to any — ITR-2.

None of the above, salary plus maybe one or two house properties, income under ₹50L? ITR-1. This year ITR-1 was expanded to include two house properties — so if you own a second property (rented or self-occupied), you may still qualify for the simpler form.

Freelancers and small business owners declaring income under presumptive taxation — Section 44AD (turnover under ₹2 crore) or Section 44ADA (professional receipts under ₹75 lakh) — use ITR-4.

Sneha's Actual Tax Calculation: What She Owes

Sneha's gross salary: ₹14.7L. Under the new regime, standard deduction of ₹75,000 brings taxable salary to ₹13.95L. Tax on that:

Now add the ₹1,14,000 STCG. Capital gains are taxed separately — not at slab rates — at 20% flat. ₹1,14,000 × 20% = ₹22,800, plus 4% cess = ₹23,712.

Total tax liability: ₹92,820 + ₹23,712 = ₹1,16,532. Her employer deducted ₹92,820. She owes ₹23,712 as self-assessment tax — payable on the IT portal before filing.

If she files after July 31, Section 234A adds 1% per month on that ₹23,712 from August 1 onwards. Two months late = ₹474 interest on top of the ₹5,000 Section 234F penalty. Small amounts, but unnecessary.

What Most People Get Wrong

Section 87A does not apply to capital gains. The rebate under Section 87A — which gives you zero tax on income up to ₹12 lakh under the new regime — applies only to slab-rate income. If your total income is ₹11.8L but includes ₹3L in STCG, the STCG is taxed at 20% regardless of rebate. Many salaried investors assume they're in the zero-tax bracket and don't file. Then they get a notice six months later.

Switching mutual fund schemes triggers STCG — even if you reinvested immediately. When you move from a regular plan to a direct plan in the same fund, or switch from one AMC to another, that is a redemption. The gain on the redeemed units is taxable in the year of switch. It doesn't matter that you reinvested in five minutes. Sneha's ₹1,14,000 STCG came entirely from plan switches she thought were "just admin."

What Your Employer Will Never Tell You

Your employer over-deducts TDS on purpose — and it's legal. Under Section 192, if they under-deduct and you owe tax at year end, the employer can be treated as an "assessee in default" under Section 201. The company faces penalties. So HR systems are calibrated to err on the side of more TDS, not less.

The result: most salaried Indians get a refund every year. Not because they've been smart about taxes. Because their employer has been lending the government their money, interest-free, all year.

The fix: submit a complete Form 12BB with your investment declarations and rent receipts to HR before January every year. If you've actually made the investments — PPF, ELSS, insurance premiums — declare them upfront and your monthly take-home goes up immediately, not in July after you file and wait six weeks for a refund.

Frequently Asked Questions

Can I switch from new regime to old regime when filing my ITR?

Yes — if you are salaried without business income. Even if your employer deducted TDS under the new regime, you can switch regimes at filing time. The portal runs both calculations and lets you choose. If you have business income, switching to old regime requires filing Form 10-IEA before the due date — you can't do it post-filing.

What happens if I miss the July 31 deadline?

You can file a belated return under Section 139(4) until December 31, 2026. But: ₹5,000 penalty under Section 234F (₹1,000 if income is ₹5L or below). You lose the right to carry forward capital losses, business losses, and speculative losses — they simply lapse. And Section 234A adds 1% per month interest on unpaid tax from August 1.

My AIS shows income I don't recognise — what do I do?

Log into incometax.gov.in, open the AIS, click on the specific transaction, and select "Feedback → Information is incorrect." The department will mark it as disputed and the burden shifts to the source (bank, AMC, employer) to confirm. File your return with the correct income and note the dispute — don't simply omit the transaction.

I changed jobs mid-year. Do I need both Form 16s?

Yes. Both employers treated your salary as if it were your only income and deducted TDS accordingly. Combined, your income may fall in a higher bracket than either employer assumed. You must declare both salaries in the same ITR and pay any shortfall as self-assessment tax. Missing one Form 16 is one of the most common triggers for Section 143(1) mismatch notices.

Does the new Income Tax Act 2025 affect this year's return?

No. The new act applies from FY 2026-27. The return you are filing this July — covering income from April 2025 to March 2026 — is entirely under the Income Tax Act, 1961. Same sections, same slabs, same deductions as last year.

When you checked your AIS this month, did the dividend and capital gains figures match your own records — or was there something you hadn't accounted for?