Changes in ITR-1 (Sahaj) Form for AY 2026-27: Bigger Scope, Tighter Compliance

 

The Income Tax Department has introduced important updates in ITR-1 (Sahaj) for AY 2026-27, reflecting a clear shift towards greater transparency, data matching, and compliance tracking.

While the form continues to remain simple for salaried taxpayers, the scope has been expanded and reporting requirements have become more detailed.

Here’s a practical breakdown of what has changed and what taxpayers must watch out for.

LTCG Reporting Now Allowed in ITR-1

One of the most notable changes is the inclusion of Long-Term Capital Gains under Section 112A in ITR-1.

Taxpayers can now report LTCG up to ₹1.25 lakh arising from equity shares or equity mutual funds.

This is a significant relief as many small investors, who earlier had to shift to ITR-2, can now continue using the simpler ITR-1 form.

However, this relaxation is limited-cases involving higher gains or complex capital transactions will still require other forms.

Reporting of Two-House Properties Permitted

Another major update is that income from up to two house properties can now be reported in ITR-1.

Earlier, taxpayers having more than one house property were forced to move to ITR-2, even if their tax affairs were otherwise simple.

This change reduces unnecessary complexity and brings more taxpayers within the ambit of Sahaj.

New Compliance Checks Introduced

The department has strengthened its data analytics by introducing additional disclosure triggers.

Taxpayers will now need to provide specific details if:

•Foreign travel expenditure exceeds ₹2 lakh

•Electricity consumption exceeds ₹1 lakh

•Other prescribed high-value conditions are met

These checks are clearly aligned with AIS and other data sources, ensuring better tracking of high-value spending patterns.

Mandatory Tenant Details for TDS Claims

A notable compliance requirement is the mandatory disclosure of tenant details.

Where TDS is claimed (for example, under rent-related provisions), taxpayers must now provide:

•PAN / Aadhaar / TAN of the tenant

This ensures proper cross-verification and reduces chances of incorrect claims.

New Tax Regime Continues as Default

The new tax regime remains the default option.

Taxpayers wishing to opt for the old regime must explicitly exercise the option, failing which the return will be processed under the new regime.

This continues the government’s push towards a simplified tax structure with lower rates and fewer deductions.

Dividend Income: More Detailed Reporting

ITR-1 now requires a quarterly breakup of dividend income.

This is primarily to facilitate accurate computation of interest under Section 234C for deferment of advance tax.

Taxpayers must ensure proper allocation of dividend income across quarters to avoid interest mismatches.

Bank Account Disclosure Tightened

Disclosure norms relating to bank accounts have been further strengthened.

Taxpayers are now required to:

•Report all bank accounts held during the year (except dormant accounts)

•Select one account for refund credit

This move enhances transparency and helps prevent refund-related issues.

Practical Impact for Taxpayers

While the structure of ITR-1 remains largely unchanged, the compliance intensity has clearly increased.

The form is now better aligned with backend data systems such as AIS and TIS, meaning any mismatch could quickly trigger notices.

Taxpayers must ensure:

•Accurate disclosure of high-value transactions

•Proper reporting of capital gains and dividend income

•Complete and correct bank and tenant details

Conclusion

The changes in ITR-1 for AY 2026–27 reflect a balanced approach-expanding eligibility while tightening compliance.

On one hand, inclusion of LTCG and two-house properties simplifies filing for many taxpayers. On the other hand, enhanced disclosures signal stricter scrutiny.

For taxpayers and professionals alike, the message is clear-simplicity in form does not mean leniency in compliance. Accurate reporting is now more critical than ever to avoid unnecessary notices and litigation