These 3 Major Changes Have Been Made to ITR Form-1, One Small Mistake Could Lead Directly to an Income Tax Notice..

The Income Tax Department has notified the new Income Tax Return (ITR) forms for the Assessment Year 2026-27. The majority of taxpayers file their returns using the ITR-1 (Sahaj) form. This time, however, some changes have been introduced to this form. Therefore, if you also utilize this form, it is advisable to understand these changes carefully. If you file your return following the old pattern, your return may be declared defective. Today, we will apprise you of the three major changes introduced in the Sahaj form.

According to the rules in force until now, if your income—in addition to your salary—was derived from profits in the stock market or mutual funds (Capital Gains), you were mandatorily required to file the ITR-2 form. However, starting this year, the government has implemented a significant change. Now, taxpayers are permitted to report Long-Term Capital Gains (LTCG) arising from listed equities and equity-oriented mutual funds within the ITR-1 form, provided that such gains do not exceed ₹1.25 lakh.

**Where Errors May Occur**

According to a report by *Live Mint*, Suraj Singh—Founder of the Chartered Accountant firm SD Singh & Associates—notes that while this change offers convenience to the middle class, it also carries a risk. If your LTCG exceeds ₹1.25 lakh by even a single rupee, and you proceed to file ITR-1, your return will be rendered invalid. Taxpayers must now maintain precise and accurate records of their investment portfolios.

**Taxpayers with Income from Two House Properties Can Now Also File the Sahaj Form**

Previously, ITR-1 was accessible only to individuals who owned a single house property (whether self-occupied or let out). If a taxpayer owned more than one property, they were required to file ITR-2. The government has now expanded the scope of ITR-1 to include taxpayers who derive income from two house properties. A new concept regarding the 'Tax Year' has now come into effect. If you are declaring details regarding two properties, the corresponding tax deductions, municipal taxes, and rental income must match your AIS (Annual Information Statement) exactly. Should any discrepancy be detected between the information recorded in the AIS and the details provided in your form, an Artificial Intelligence (AI)-based system will immediately generate a notice.

**The New Math of LTCG**
The major changes to tax rates introduced in the 2024-25 Budget are now directly reflected in the forms for Assessment Year 2026-27. Previously, Long-Term Capital Gains (LTCG) were subject to varying rates of 10% and 12.5%. However, the 2024-25 Budget standardized the LTCG rates across all asset classes: 12.5% ​​without indexation and 20% with indexation. These new rates will apply when filing ITR-1 for the Financial Year 2025-26.

When filing your return, you are now required to provide details regarding investments and sales—including the specific dates—within Schedule CG. Since tax rates changed mid-year, failing to provide the precise dates of transactions could prove costly. If you do not correctly select the applicable tax slab based on the transaction dates, your tax calculation will be erroneous; the Department may interpret this as "under-reporting" and impose penalties.

Your AIS will now display "Consolidated TDS Codes." This signifies that every single rupee—whether from bank interest, dividends, or salary—is already under the Department's scrutiny. Furthermore, the rules for those claiming House Rent Allowance (HRA) have become stricter. Merely submitting rent receipts is no longer sufficient; it is now mandatory to provide your landlord's PAN.

**Who Cannot File ITR-1?**
Not every salaried individual is eligible to file ITR-1. In the following situations, you are mandatorily required to file the detailed form (ITR-2):

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