ITR Filing FY 2025-26: Pick the Right Form, Skip the Notice
You earn well, you hold a few mutual funds, maybe RSUs from a foreign parent, perhaps a second flat — and every June the same question lands: which ITR form, and what will trigger a notice this year? For FY 2025-26 (AY 2026-27) the forms changed in exactly the places that matter to your bracket. Get the form wrong and the portal still accepts it; the defective-return notice just arrives in October.
Summary
| Your situation | Form to file | Due date | The number that matters |
|---|---|---|---|
| Salary + up to 2 house properties, equity LTCG ≤ ₹1.25 lakh | ITR-1 (Sahaj) | 31 Jul 2026 | Nil tax up to ₹12 lakh taxable (sec 87A) |
| Equity LTCG > ₹1.25 lakh, or total income > ₹50 lakh | ITR-2 | 31 Jul 2026 | LTCG taxed 12.5% above ₹1.25 lakh/year |
| Foreign RSUs, ESPP or a foreign bank account | ITR-2 + Schedule FA | 31 Jul 2026 | ₹10 lakh penalty for non-disclosure |
| Consulting, freelance or business income | ITR-3 / ITR-4 | 31 Aug 2026 | 44ADA presumptive: 50% of receipts |
| Missed the date | Belated ITR | 31 Dec 2026 | Late fee ₹5,000 (income > ₹5 lakh) |
What actually changed this year
ITR-1 got wider — but there's a hard line at ₹1.25 lakh
For AY 2026-27 you can finally file the simple ITR-1 with up to two house properties and with long-term capital gains under section 112A up to ₹1.25 lakh. Sounds generous. The catch: book even ₹1 over ₹1.25 lakh of equity LTCG in the year, or carry forward any capital loss, and ITR-1 is off the table — you file ITR-2. Someone sitting at ₹1.2 lakh of LTCG stays on ITR-1; the same person at ₹1.35 lakh must move to ITR-2. Action: total your realised equity gains for the year before you pick a form, not after the portal pre-fills one for you.
Capital gains reporting is simpler — and stricter
The old split between gains before and after 23 July 2024 is gone. For the full FY 2025-26, equity STCG is taxed at 20% and LTCG at 12.5% above the ₹1.25 lakh annual shield — one rate set, no date-splitting in Schedule CG. Deductions are now chosen from a drop-down with the exact sub-clause, so a vague "80C" no longer works; pick the wrong clause and the return mismatches the portal's own logic. Section 80G donations now demand the transaction reference number and the bank IFSC. Action: keep donation receipts with their payment references in hand before you start, not midway through.
AIS, TIS and Form 26AS — reconcile before you file, not after
High earners hand the department the most data points: salary TDS, RSU perquisite, dividend TDS under section 194, interest under section 194A, mutual-fund redemptions, and TDS on property purchases under section 194-IA. If your return doesn't match the Annual Information Statement (AIS) and Form 26AS, you invite a defective-return notice under section 139(9) or a scrutiny flag. Dividends are pre-filled but routinely understated; large RSU sales surface as high-value transactions. Action: download AIS, TIS and 26AS, tally them line by line against Form 16 and 16A, and use the portal's feedback button to correct any wrong entry before you submit.
Schedule FA — the foreign-RSU trap
If your employer's parent is listed abroad, your vested RSUs and the foreign brokerage account holding them are foreign assets, and you must report them in Schedule FA even if you never sold a single share. Schedule FA runs on the calendar year — January to December 2025 for this return, not the April-March financial year. Skip it and the penalty under the Black Money Act is ₹10 lakh per year, independent of the asset's value. This is the single most under-reported item for salaried professionals earning ₹15 lakh and above. Action: list every foreign holding you had at any point in 2025 — vested or not, sold or not.
Real example: Priya, ₹32L CTC, Bengaluru, US-parent RSUs
Priya booked ₹1.6 lakh of equity LTCG this year, holds ₹18 lakh of vested RSUs in a US brokerage, and earned ₹90,000 in dividends. The portal happily offers her the quick ITR-1. It shouldn't.
| Item | Filed ITR-1 (the easy trap) | Filed ITR-2 (correct) |
|---|---|---|
| Equity LTCG ₹1.6 lakh | Cannot be reported correctly above ₹1.25 lakh | ₹35,000 taxable at 12.5% = ₹4,375 |
| Dividends ₹90,000 | Often missed from AIS | Reconciled and reported |
| US RSUs ₹18 lakh | Not disclosed | Declared in Schedule FA |
| Likely outcome | Section 139(9) notice + Black Money exposure | Clean return, refund on time |
The "wrong" column costs Priya nothing on filing day and a great deal three months later.
What to do this week
- Download your AIS, TIS and Form 26AS and reconcile them against Form 16 and any 16A — flag every mismatch with the portal's feedback option.
- Add up your realised equity gains for the year; if they cross ₹1.25 lakh or you hold foreign RSUs, file ITR-2, not ITR-1.
- List every foreign asset held at any time from January to December 2025 — RSUs, ESPP, foreign bank accounts — ready for Schedule FA.
- File by 31 July 2026 if you are salaried; consulting income buys you until 31 August, but advance-tax interest under sections 234B and 234C keeps running regardless.
File once, file right
The income-tax portal will happily accept the wrong form — the consequences simply arrive later, as a section 139(9) notice or a Black Money query you did not see coming. Reconcile your AIS first, pick the form your income actually demands, and disclose foreign assets even in a year you sold nothing. For a ₹15 lakh-plus filer, that discipline is the entire game.
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