{"id":1361,"date":"2026-07-28T19:30:11","date_gmt":"2026-07-28T14:00:11","guid":{"rendered":"https:\/\/moneymita.com\/?p=1361"},"modified":"2026-07-28T19:30:13","modified_gmt":"2026-07-28T14:00:13","slug":"itr-1-vs-itr-2-ay-2026-27-guide","status":"publish","type":"post","link":"https:\/\/moneymita.com\/?p=1361","title":{"rendered":"ITR-1 vs ITR-2: AY 2026-27 GUIDE"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Choosing between ITR-1 vs ITR-2 AY 2026-27 is the first step towards filing your Income Tax Return correctly. While ITR-1 (Sahaj) is suitable for many resident individuals, others may choose to file ITR-2 depending on their income and eligibility. This guide explains the key differences between ITR-1 and ITR-2, when each form should be used, and the important changes introduced in ITR-2 for AY 2026-27.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 ez-toc-wrap-left-text counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/moneymita.com\/?p=1361\/#Why_Choosing_the_Correct_ITR_Matters\" >Why Choosing the Correct ITR Matters?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/moneymita.com\/?p=1361\/#What_Decides_the_Correct_ITR\" >What Decides the Correct ITR?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/moneymita.com\/?p=1361\/#Consequences_of_Filing_the_Wrong_ITR\" >Consequences of Filing the Wrong ITR<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/moneymita.com\/?p=1361\/#ITR-1_vs_ITR-2_%E2%80%93_AY_2026-27_Key_Differences\" >ITR-1 vs ITR-2 &#8211; AY 2026-27: Key Differences<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/moneymita.com\/?p=1361\/#ITR-1_vs_ITR-2_%E2%80%93_AY_2026-27_Similarities\" >ITR-1 vs ITR-2 &#8211; AY 2026-27: Similarities<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/moneymita.com\/?p=1361\/#When_Should_You_Choose_ITR-1_in_AY_2026-27\" >When Should You Choose ITR-1 in AY 2026-27?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/moneymita.com\/?p=1361\/#Who_Should_File_ITR-2_in_AY_2026-27\" >Who Should File ITR-2 in AY 2026-27?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/moneymita.com\/?p=1361\/#Who_Cannot_File_ITR-2_in_AY_2026-27\" >Who Cannot File ITR-2 in AY 2026-27?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/moneymita.com\/?p=1361\/#Key_Changes_in_ITR-2_for_AY_2026-27\" >Key Changes in ITR-2 for AY 2026-27<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/moneymita.com\/?p=1361\/#Frequently_Asked_Questions_FAQ\" >Frequently Asked Questions (FAQ)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/moneymita.com\/?p=1361\/#Final_Thoughts\" >Final Thoughts<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Choosing_the_Correct_ITR_Matters\"><\/span>Why Choosing the Correct ITR Matters?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Filing an Income-tax Return (ITR) is not just about reporting income and paying taxes. Selecting the correct ITR form is equally important. Every year, the Central Board of Direct Taxes (<strong>CBDT) notifies seven (7) ITR forms (ITR-1 to ITR-7)<\/strong>, each meant for a specific category of taxpayer and type of income.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since residential status and sources of income differ, one ITR form cannot be used by everyone. Selecting the correct ITR helps ensure proper reporting and smooth processing of your return.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Correct disclosure of income and taxes alone is not enough. Filing an ineligible ITR may still lead to compliance issues. Therefore, always determine the correct ITR form before filing your return.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Decides_the_Correct_ITR\"><\/span>What Decides the Correct ITR?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The correct ITR form depends mainly on the following factors:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Category of taxpayer<\/strong> \u2013 Individual, Hindu Undivided Family (HUF), Firm, LLP, Company, Trust, etc.<\/li>\n\n\n\n<li><strong>Residential status<\/strong> under the Income-tax Act.<\/li>\n\n\n\n<li><strong>Nature of income<\/strong> earned during the relevant previous year under the five heads of income.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Based on these factors, taxable income and tax liability are computed, and the prescribed ITR form is used to report them for the relevant assessment year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Consequences_of_Filing_the_Wrong_ITR\"><\/span>Consequences of Filing the Wrong ITR<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Choosing an incorrect ITR form may lead to compliance issues even if your income and tax have been correctly computed. If the prescribed ITR form is not used or the return lacks the required particulars, the Income-tax Department may treat it as a defective return under the Income-tax Act. For example:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Filing an ineligible ITR form<\/strong> that does not match the taxpayer&#8217;s category or nature of income. (the primary focus of this article.)<\/li>\n\n\n\n<li><strong>Failure to furnish a tax audit report<\/strong> where tax audit is mandatory under the Income-tax Act.<\/li>\n\n\n\n<li>Computing income under an <strong>incorrect presumptive taxation provision<\/strong>, such as claiming the benefit of Section 44AD instead of Section 44ADA of the Income Tax Act 1961, or vice versa.<\/li>\n\n\n\n<li><strong>Failure to furnish proof of tax payment<\/strong> while filing an <strong>Updated Return<\/strong> (ITR-U), wherever such proof is required.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example:<\/strong> An individual eligible to file ITR-4 files ITR-3 instead. Since the prescribed ITR form has not been used, the return may be treated as defective.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On receiving a defective return notice, the taxpayer must generally rectify the defect within 15 days of the intimation. An extension may be sought from the Assessing Officer. Failure to rectify the defect within the prescribed or extended period may result in the return being treated as invalid. However, if the defect is rectified before completion of the assessment, the Assessing Officer may condone the delay and accept the return.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Content<\/strong><\/td><td><strong>The Income Tax Act 2025<\/strong><\/td><td><strong>The Income Tax Act 1961 (Repealed)<\/strong><\/td><\/tr><tr><td>Defective Return<\/td><td>Section 263(7)<\/td><td>Section 139(9)<\/td><\/tr><tr><td>Tax Audit<\/td><td>Section 63<\/td><td>Section 44AB<\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\">\ud83d\udd0e<em><strong>THE LEGAL LENS-1, \ud83c\udf10<a href=\"https:\/\/www.moneymita.com\" data-type=\"link\" data-id=\"https:\/\/www.moneymita.com\" target=\"_blank\" rel=\"noreferrer noopener\">MONEYMITA<\/a><\/strong><\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To know more about Updated Return, please visit the blog post <em><strong>&#8220;<a href=\"https:\/\/moneymita.com\/?p=820\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/moneymita.com\/?p=820\" rel=\"noreferrer noopener\">ITR U-2025: Reasons for Updating Return<\/a>&#8220;<\/strong><\/em>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ITR-1_vs_ITR-2_%E2%80%93_AY_2026-27_Key_Differences\"><\/span>ITR-1 vs ITR-2 &#8211; AY 2026-27: Key Differences<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><em>SERIAL NUMBER-PARTICULARS<\/em><\/td><td><strong><em>ITR-1 SAHAJ<\/em><\/strong><\/td><td><strong><em>ITR-2<\/em><\/strong><\/td><\/tr><tr><td><strong>1. Who can file?&nbsp;<\/strong><\/td><td>Resident and Ordinarily Resident (R-OR) Individuals only.<\/td><td>Resident and non-resident individuals (including R-NORs and NRIs) and HUFs.<\/td><\/tr><tr><td><strong>2. Individuals governed by the Portuguese Civil Code<\/strong><\/td><td>\u274c Not Eligible.<\/td><td>\u2611\ufe0fEligible to use this ITR and schedule 5A is earmarked for them.<\/td><\/tr><tr><td><strong>3. Company Director&nbsp;<\/strong><\/td><td>\u274c Not Eligible.<\/td><td>\u2611\ufe0fEligible.<\/td><\/tr><tr><td><strong>4. Hindu Undivided Family-HUF<\/strong><\/td><td>\u274c Not Eligible.<\/td><td>\u2611\ufe0fEligible.<\/td><\/tr><tr><td><strong>5. Maximum Total Income<\/strong><\/td><td>Up to Rupees Fifty Lakhs (&lt;=\u20b950 lakhs)<\/td><td>Above Rupees Fifty Lakhs (\u20b950 lakhs) <strong>OR <\/strong>&#8220;otherwise not eligible for ITR-1&#8221;.<\/td><\/tr><tr><td><strong>6. Salary \/ Pension Income<\/strong><\/td><td>Salary and pension income can be reported, though relief under Section 89A of the Income Tax Act 1961, cannot be claimed.<\/td><td>Salary and pension income can be reported, along with relief under Section 89A of the Income Tax Act 1961, in respect of income from a specified foreign retirement benefit account can be claimed, wherever applicable.&nbsp;<\/td><\/tr><tr><td><strong>7. House Property<\/strong><\/td><td>Up to two house properties.<\/td><td>Any number of house property.<\/td><\/tr><tr><td><strong>8. Capital Gains<\/strong><\/td><td>Only eligible Long Term Capital Gains LTCG under Section 112A of the IT Act 1961, up to Rupees One Lakh Twenty-Five Thousand only (\u20b91.25 lakh) (reporting purpose only).<\/td><td>All types of capital gains and Losses.<\/td><\/tr><tr><td><strong>9<\/strong>. <strong>Income from Virtual Digital Assets<\/strong> <strong>(VDA)<\/strong><\/td><td>\u274c Can\u2019t be disclosed through this ITR.<\/td><td>\u2611\ufe0fCan be reported if held for investment purposes only.&nbsp;<\/td><\/tr><tr><td><strong>10. Agricultural Income<\/strong><\/td><td>Up to Rupees Five thousand Only. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; (&lt;=\u20b95,000 \/-)<\/td><td>More than Rupees Five thousand (&gt;\u20b95,000 \/-).<\/td><\/tr><tr><td><strong>11. Income From Other Sources (IFOS)<\/strong><\/td><td>\u274ca) Income taxable at special rates cannot be reported.<br>\u274cb) Separate reporting of interest from Companies, NBFCs and HFCs is not available.<\/td><td>\u2611\ufe0f a) Income taxable at special rates can be reported through <strong>Schedule SI<\/strong>.&nbsp;<br>\u2611\ufe0fb) <strong>Schedule OS <\/strong>separately reports interest received from companies, NBFCs and HFCs.&nbsp;&nbsp;<br><\/td><\/tr><tr><td><strong>12.<\/strong> <strong>Foreign Assets \/ Foreign Income \/ Foreign Account&nbsp;<\/strong><\/td><td><br>\u274cNot Allowed.<br><\/td><td> \u2611\ufe0fAllowed.<\/td><\/tr><tr><td><strong>13. Clubbing of Income<\/strong><\/td><td><br>\u274cCertain clubbing cases (where TDS credit of the other person is to be claimed) cannot be reported in ITR-1.<\/td><td>\u2611\ufe0fPermitted; along with TDS credit of the other person can be availed.<\/td><\/tr><tr><td><strong>14.<\/strong> <strong>Foreign Tax Relief &amp; Section 89A Relief<\/strong><\/td><td>\u274c Not Available.<\/td><td>\u2611\ufe0f Available.<\/td><\/tr><tr><td><strong>15. Set-off &amp; Carry Forward of Losses<\/strong><\/td><td>\u274c Generally not permitted.&nbsp;<br><strong>Exception:<\/strong> Current year house property loss up to Rupees Two Lakhs (&lt;=\u20b92 lakhs) can be set off.&nbsp;<\/td><td>\u2611\ufe0f Permitted.<\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\"><strong><em>ITR-1 vs ITR-2-KEY DIFFERENCES,<\/em> \ud83c\udf10<a href=\"https:\/\/www.moneymita.com\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/www.moneymita.com\" rel=\"noreferrer noopener\">MONEYMITA<\/a><\/strong><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Note:<\/strong> Section 89A provides relief in respect of income from a specified foreign retirement benefit account. Sections 90, 90A and 91 provide relief for taxes paid outside India, subject to prescribed conditions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ITR-1_vs_ITR-2_%E2%80%93_AY_2026-27_Similarities\"><\/span>ITR-1 vs ITR-2 &#8211; AY 2026-27: Similarities<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Despite their differences, ITR-1 and ITR-2 share the following common features:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Neither form can be used to report income chargeable under the head <strong>&#8220;Profits and Gains of Business or Profession-(PGBP)&#8221;.<\/strong><\/li>\n\n\n\n<li>An individual partner receiving interest, salary, bonus, commission or remuneration from a <strong>partnership firm<\/strong> cannot file ITR-1 or ITR-2. Such income is taxable as <strong>business income<\/strong> and must be reported in the applicable business ITR 3 or 4, as applicable.<\/li>\n\n\n\n<li>Both forms <strong>allow <\/strong>reporting of <strong>salary and pension<\/strong> income.<\/li>\n\n\n\n<li>Tax liability under both forms can be computed under either the old tax regime or the new tax regime, depending on the taxpayer&#8217;s eligibility and choice.<\/li>\n\n\n\n<li>Both forms <strong>can be filed electronically<\/strong> through the Income-tax e-Filing Portal.<\/li>\n\n\n\n<li>The <strong>due date<\/strong> for filing <strong>ITR-1 and ITR-2 <\/strong>for AY 2026-27 is generally <strong>31 July 2026<\/strong>, unless extended by the Government.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_Should_You_Choose_ITR-1_in_AY_2026-27\"><\/span>When Should You Choose ITR-1 in AY 2026-27?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">You can file ITR-1 (Sahaj) for AY 2026-27 if you are a Resident and Ordinarily Resident (ROR) individual (not an HUF) and your income consists of:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Salary or pension.<\/li>\n\n\n\n<li>Income (or loss) from up to two house properties (subject to prescribed conditions).<\/li>\n\n\n\n<li> Family pension.<\/li>\n\n\n\n<li>&nbsp;Income from other sources (except income taxable at special rates).<\/li>\n\n\n\n<li> Eligible Long Term Capital Gains (LTCG) under Section 112A of the IT Act 1961, up to Rupees One Lakh Fifty Thousand Only (\u20b91.25 lakh).&nbsp;<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>For detailed eligibility conditions and restrictions, read our blog &#8220;<a href=\"https:\/\/moneymita.com\/?p=1222\" data-type=\"link\" data-id=\"https:\/\/moneymita.com\/?p=1222\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Can ITR-1 be filed in AY 2026-27 with Capital Gains?<\/em><\/a>&#8220;- A complete guide on ITR-1 (Sahaj) Eligibility for AY 2026-27<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_Should_File_ITR-2_in_AY_2026-27\"><\/span>Who Should File ITR-2 in AY 2026-27?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">ITR-2 is meant for Individuals and Hindu Undivided Families (HUFs) without income from business or profession. It can be filed by Resident, Resident and Ordinarily Resident (R-OR), Resident but Not Ordinarily Resident (R-NOR) and Non-Resident (NRI) taxpayers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Generally, ITR-2 can be filed if your income includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Salary or pension.<\/li>\n\n\n\n<li>Income or loss from one or more house properties.<\/li>\n\n\n\n<li>Capital gains\/losses (short-term or long-term).<\/li>\n\n\n\n<li>Income from other sources, including income taxable at special rates.<\/li>\n\n\n\n<li>Foreign assets or foreign income, wherever applicable.<\/li>\n\n\n\n<li>Clubbed income of a spouse, minor child or any other person, along with their tax credits.<\/li>\n\n\n\n<li>Other income or disclosures that are not permitted in ITR-1 (Sahaj) but are covered in ITR-2.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">In simple words, if you are an individual or HUF without business or professional income, but are not eligible to file ITR-1, you should generally file ITR-2.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_Cannot_File_ITR-2_in_AY_2026-27\"><\/span>Who Cannot File ITR-2 in AY 2026-27?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">An individual or HUF cannot file ITR-2 if any of the following applies:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Any person other than an individual or HUF, such as a partnership firm, LLP, company, co-operative society or trust.<\/li>\n\n\n\n<li>Income includes interest, salary, bonus, commission or remuneration from a partnership firm, taxable as business income.<\/li>\n\n\n\n<li>Income chargeable under the head &#8220;Profits and Gains of Business or Profession (PGBP).&#8221; Such taxpayers should generally file ITR-3 or ITR 4, as applicable.<\/li>\n\n\n\n<li><strong>Claiming exemption under Section 10AA<\/strong> in respect of export profits of eligible Special Economic Zone <strong>(SEZ)<\/strong> units.<\/li>\n\n\n\n<li>Claiming <strong>business profit-linked deductions <\/strong>under Part C of Chapter VI-A, such as Sections 80-IBA, 80JJA or 80JJAA.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><em><strong>Practical Example<\/strong><\/em><br>Mr. Bhaskar Senapati, is a salaried employee who also earns professional income from consultancy. Since his professional income is chargeable under the head &#8220;Profits and Gains of Business or Profession (PGBP),&#8221; he cannot file ITR-2 and should generally file ITR-3 instead.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Changes_in_ITR-2_for_AY_2026-27\"><\/span>Key Changes in ITR-2 for AY 2026-27<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Income-tax Department has introduced a few important changes in the form ITR-2 for AY 2026-27 to simplify reporting and improve disclosure requirements.<\/p>\n\n\n\n<p class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-ba9cab56ed7639d245382d47cf827d15 wp-block-paragraph\"><strong><em>1<\/em>. <em>Dual Reporting of Capital Gains Removed:<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Place Of Change: S<\/strong>chedule <strong>112A<\/strong> of ITR-2 (Linked to Schedule CG &#8211; Capital Gains).<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-ast-global-color-5-background-color has-background\"><thead><tr><th>PARTICULARS<\/th><th>AY 2025-2026 (OLD)<\/th><th>AY 2026-2027 (NEW)<\/th><\/tr><\/thead><tbody><tr><td>Reporting in Schedule 112A<\/td><td><em>Dual Reporting<\/em> of LTCG under Section 112A of the IT Act 1961&#8242; was <em>required<\/em>.<\/td><td><em>Dual Reporting abolished<\/em>.<\/td><\/tr><tr><td><em><span style=\"text-decoration: underline;\"><strong>What&#8217;s to report?<\/strong><\/span><\/em><br> Long-term capital gains (LTCG) arising from the transfer of listed equity shares, equity-oriented mutual fund units and business trust units on which Securities Transaction Tax (STT) has been paid. <br><br>The details reported in this schedule flow into <strong>Schedule CG (Capital Gains).<\/strong>&nbsp;<br><\/td><td>LTCG under Section 112A of the IT Act 1961 for transfers made:\u00a0<br>1) Before 23rd July 2024 taxable at 10%.<br>2) On or after 23rd July 2024, taxable at 12.50%.<br><br>This was because the <strong>Finance (No. 2) Act, 2024<\/strong> changed the tax rates from <strong>23rd July 2024<\/strong>, making separate reporting necessary for the transitional year.\u00a0<br><br>This transitional reporting requirement made Schedule CG more complex to complete.<br><br><\/td><td>Since there was no mid-year change in the capital gains tax regime during FY 2025-26, separate reporting based on the transfer date is no longer required.<br><br>Consequently, Schedule 112A and Schedule CG have become simpler to complete.<br><\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\"><em><strong>REPORTING IN SCH-112A<\/strong><\/em>, \ud83c\udf10<strong><a href=\"https:\/\/www.moneymita.com\" data-type=\"link\" data-id=\"https:\/\/www.moneymita.com\" target=\"_blank\" rel=\"noreferrer noopener\">MONEYMITA<\/a><\/strong><\/figcaption><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-1st-Schedule-112A-1024x1024.png\" alt=\"Schedule 112A reporting in 2 Assessment years\" class=\"wp-image-1381\" title=\"\" srcset=\"https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-1st-Schedule-112A-1024x1024.png 1024w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-1st-Schedule-112A-300x300.png 300w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-1st-Schedule-112A-150x150.png 150w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-1st-Schedule-112A-768x768.png 768w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-1st-Schedule-112A.png 1080w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-1ff53243ef30f7b5eee8d8b5ed99c81b wp-block-paragraph\"><em><strong>2.<\/strong> <strong>New Reporting of Interest Income from Companies, NBFCs &amp; HFCs:<\/strong><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Place of Change:<\/strong> <strong>Schedule OS<\/strong> (Income from Other Sources) of <strong>ITR-2 \u2013 Row 1(b)(ix)<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Interest income from fixed deposits, bonds and debentures held with Companies, NBFCs and HFCs was earlier reported under <strong>&#8220;Others&#8221; in Row 1(b)(ix) of Schedule OS<\/strong>. From AY 2026-27, the same row has been specifically renamed to include interest from Companies, NBFCs and HFCs. This amendment applies where the assessee is not engaged in the business of moneylending.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>PARTICULARS<\/th><th>AY 2025-2026 (OLD)<\/th><th>AY 2026-2027 (NEW)<\/th><\/tr><\/thead><tbody><tr><td>Interest income from fixed deposits, bonds and debentures held with Companies, NBFCs &amp; HFCs.<\/td><td>No separate reporting field was available. Such interest income was reported under <strong>&#8220;OTHERS&#8221;<\/strong>.<\/td><td>A <strong>separate reporting<\/strong> in the same row of last year, has been introduced for interest from:<br>1) Companies<br>2)  Non-banking Financial Companies (NBFCs)<br>3) Housing Finance Companies (HFCs)<\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\"><strong><em>REPORTING IN SCH-OS,<\/em> \ud83c\udf10<a href=\"https:\/\/www.moneymita.com\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/www.moneymita.com\" rel=\"noreferrer noopener\">MONEYMITA<\/a><\/strong><\/figcaption><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-2nd-Schedule-OS-1024x1024.png\" alt=\"Reporting of New Interest Income under &quot;OTHERS&quot;\" class=\"wp-image-1383\" title=\"\" srcset=\"https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-2nd-Schedule-OS-1024x1024.png 1024w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-2nd-Schedule-OS-300x300.png 300w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-2nd-Schedule-OS-150x150.png 150w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-2nd-Schedule-OS-768x768.png 768w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-2nd-Schedule-OS.png 1080w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-6a8c545dfd6cb99c9d994605a59e08fd wp-block-paragraph\"><strong><em>3. Separate Reporting of Certain Interest Income of NRIs Taxable at the Concessional Rate of 9%:<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Place of Change:<\/strong> <strong>A)<\/strong> <strong>Schedule OS<\/strong> (Income from Other Sources) \u2013 <strong>Row 2(d):<\/strong> Any Other Income Chargeable at Special Rate. \ud83d\udc49 Select \u201cIncome Taxable under section 115(A)(1)(a)(iia) of the IT Act 1961\u201d from the drop-down menu. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>B)<\/strong> <strong>Schedule SPI- SI<\/strong> (Special Income) \u2013 New <strong>Rows 60 and 61<\/strong> have been inserted for reporting income received by a non-resident as referred to in the second proviso to Section 194LC (1) of the IT Act 1961.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u27a1\ufe0fThe payer (borrower) is required to deduct <strong>TDS <\/strong>at the concessional rate of<strong> 9% <\/strong>while making interest payment to the NRI under the second proviso to Section <strong>194LC(1)<\/strong> of the Income-tax Act, 1961.&nbsp;&nbsp;<br><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>PARTICULARS<\/th><th>AY 2025-2026 (OLD)<\/th><th>AY 2026-2027 (NEW)<\/th><\/tr><\/thead><tbody><tr><td>Money Lent in foreign currency by an NRI to an Indian company or business trust.<\/td><td>Interest income received by an NRI from long-term infrastructure bonds was reportable at the <strong>concessional tax\/TDS rate of 5%<\/strong>.<\/td><td>In addition to the existing category,\u00a0<br>\u201c<strong>An additional category\u201d<\/strong> has been introduced for interest received by an NRI from money lent <strong>through<\/strong>:<br>1) long-term bonds,<br>2) Rupee-denominated bonds.<br><strong>Provided<\/strong> bonds are<br>1) issued on or after 1st July 2023<br>2) listed on a recognized stock exchange in an <b>IFSC <\/b>and <strong>TDS<\/strong> is deductible at the concessional rate of <strong>9%.<\/strong><br><br><br><\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\"><em><strong>REPORTING IN SCH- OS &amp; SI,<\/strong><\/em> \ud83c\udf10<strong><a href=\"https:\/\/www.moneymita.com\" target=\"_blank\" data-type=\"link\" data-id=\"https:\/\/www.moneymita.com\" rel=\"noreferrer noopener\">MONEYMITA<\/a><\/strong><\/figcaption><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-3rd-Schedule-SPI-SI-1024x1024.png\" alt=\"Interest Income of NRI taxable at reduced TDS rates.\" class=\"wp-image-1384\" title=\"\" srcset=\"https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-3rd-Schedule-SPI-SI-1024x1024.png 1024w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-3rd-Schedule-SPI-SI-300x300.png 300w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-3rd-Schedule-SPI-SI-150x150.png 150w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-3rd-Schedule-SPI-SI-768x768.png 768w, https:\/\/moneymita.com\/wp-content\/uploads\/2026\/07\/BLOG-3rd-Schedule-SPI-SI.png 1080w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>Want to File ITR-2 for AY 2026-27?<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For <strong><a href=\"https:\/\/www.incometax.gov.in\/iec\/foportal\/downloads\/income-tax-returns#itr%202\" data-type=\"link\" data-id=\"https:\/\/www.incometax.gov.in\/iec\/foportal\/downloads\/income-tax-returns#itr%202\" target=\"_blank\" rel=\"noreferrer noopener\">E-filing of ITR-2<\/a><\/strong>, please visit the Income-tax E-Filing Portal.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQ\"><\/span>Frequently Asked Questions (FAQ)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Q1.Can a HUF claim rebate under Section 87A of the Income-tax Act, 1961 while filing ITR-2? <\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Ans<\/strong>. \u274cNo, <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Rebate under Section 87A is available only to an individual. A Hindu Undivided Family (HUF) is not eligible to claim this rebate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Q2. Can an NRI claim rebate under Section 87A of the Income-tax Act, 1961 while filing ITR-2 for AY 2026-27?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Ans<\/strong>. <strong>\u274cNo, <\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Rebate under Section 87A is available only to a resident <strong>individual of India<\/strong>. An NRI is not eligible to claim this rebate.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Q3. What is the basic checklist before filing ITR-2 on the E-Filing Portal?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Ans.<\/strong> Before filing ITR-2, ensure that:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>\ud83d\udc49PAN is linked with Aadhaar.<\/li>\n\n\n\n<li>\ud83d\udc49Your bank account is pre-validated to receive any refund.<\/li>\n\n\n\n<li>\ud83d\udc49You have selected the correct ITR form.<\/li>\n\n\n\n<li>\ud83d\udc49You E-Verify your return after submission.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Q4.<\/strong> <strong>Can I file ITR-1 instead of ITR-2 to make filing easier?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Ans.<\/strong> \u274cNo, <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You must file the ITR form applicable to your income and eligibility. Filing an incorrect ITR may result in the return being treated as defective.<br><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Final_Thoughts\"><\/span><em>Final Thoughts<\/em><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>31 July 2026: Don&#8217;t Wait Until the Last Day<\/strong>: Choosing the correct <strong>ITR-1 or ITR-2<\/strong> is the first step towards hassle-free tax filing. Review your income, eligibility and disclosure requirements carefully before filing your return. If you are unsure about the applicable ITR form, consult a tax professional to ensure accurate filing and timely compliance.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Choosing between ITR-1 vs ITR-2 AY 2026-27 is the first step towards filing your Income Tax Return correctly. While ITR-1 [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":1393,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[32,25,24],"tags":[330,371,372,375,369,370,332,373,328,368,374],"class_list":["post-1361","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lawscape","category-direct-tax","category-taxation","tag-capital-gains","tag-e-filing-of-itr-1","tag-e-filing-of-itr-2","tag-income-from-other-sources","tag-income-tax-filing-ay-2026-27","tag-income-tax-india","tag-income-tax-return-itr","tag-income-tax-return-forms","tag-itr-1-sahaj","tag-itr-2","tag-nri-taxation"],"_links":{"self":[{"href":"https:\/\/moneymita.com\/index.php?rest_route=\/wp\/v2\/posts\/1361","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneymita.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneymita.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneymita.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/moneymita.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1361"}],"version-history":[{"count":25,"href":"https:\/\/moneymita.com\/index.php?rest_route=\/wp\/v2\/posts\/1361\/revisions"}],"predecessor-version":[{"id":1396,"href":"https:\/\/moneymita.com\/index.php?rest_route=\/wp\/v2\/posts\/1361\/revisions\/1396"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneymita.com\/index.php?rest_route=\/wp\/v2\/media\/1393"}],"wp:attachment":[{"href":"https:\/\/moneymita.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneymita.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneymita.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}