ITR-2 Budget Changes — A.Y. 2026-27

ITR-2 Budget Changes — A.Y. 2026-27


In line with the provisions introduced through the Union Budget for Assessment Year 2026–27 and the latest Income Tax Return (ITR) schema released by the Income Tax Department, Express ITR has been updated to incorporate the revised tax structure, enhanced reporting requirements, new validation rules, and additional disclosure fields applicable to Form ITR-2.
These enhancements are intended to ensure complete compliance with the latest statutory requirements while providing taxpayers and tax professionals with a seamless return preparation and filing experience.

1. New Tax Regime – Revised Tax Slab Structure
The tax slab structure under the New Tax Regime has been revised with effect from Assessment Year 2026–27 as follows:

      

The revised slab structure aims to provide enhanced tax relief to individual taxpayers and improve disposable income while encouraging wider adoption of the New Tax Regime.

2. Rebate under Section 87A
The provisions relating to rebate under Section 87A have been revised under the New Tax Regime.
Key Provisions
  1. Resident Individuals having total income up to ₹12,00,000 shall be eligible for rebate under Section 87A.
  2. Eligible taxpayers may effectively have no tax liability after claiming the rebate.
  3. In the case of salaried taxpayers, considering the Standard Deduction of ₹75,000, the effective tax-free income may extend up to ₹12.75 lakh.
Marginal Relief
To prevent an undue tax burden where income marginally exceeds the rebate threshold, Marginal Relief provisions have been incorporated.
Marginal Relief ensures that the additional tax payable does not exceed the amount by which the total income exceeds ₹12,00,000.
Method of Computation
The software computes Marginal Relief automatically using the following methodology:
  1. Determine the total taxable income.
  2. Calculate tax liability as per the applicable slab rates.
  3. Compute the excess income over ₹12,00,000.
  4. Compare:
    1. Tax liability calculated under the slab rates; and
    2. Excess income over ₹12,00,000.
  5. Restrict the tax payable to the lower of the above amounts.
Illustration -

      
The Marginal Relief benefit shall be calculated automatically by the application wherever applicable.

3. Standard Deduction
The Standard Deduction available under the New Tax Regime continues to be available and has been incorporated in the return computation process.
  1. Standard Deduction of ₹75,000 shall be available to eligible salaried taxpayers opting for the New Tax Regime.
The deduction shall be considered automatically during tax computation.

4. Basic Exemption Limit
The Basic Exemption Limit under the New Tax Regime has been enhanced.
Revised Limit
  1. Basic Exemption Limit: ₹4,00,000
The revised exemption threshold has been incorporated into the tax computation engine of Express ITR.

5. Capital Gains Taxation
The capital gains taxation provisions have been revised in accordance with the amendments introduced through the Finance Act.
Equity-Oriented Investments
  1. Long-Term Capital Gains (LTCG) on equity shares and equity-oriented instruments shall be taxable at 12.5% on gains exceeding ₹1.25 lakh.
  2. Short-Term Capital Gains (STCG) on equity shares and equity-oriented instruments shall be taxable at 20%.
Immovable Property
  1. Long-Term Capital Gains arising from the transfer of immovable property, where the date of transfer is on or after 23 July 2024, shall be taxable at 12.5% without indexation benefit.
  2. Resident Individuals and Hindu Undivided Families (HUFs) transferring immovable property acquired before 23 July 2024 may opt for taxation at 20% with indexation benefit, subject to the prescribed conditions.
The application automatically applies the relevant tax treatment based on the nature of the asset and the transaction date.

6. Old Tax Regime
The Old Tax Regime continues to remain available as an optional taxation regime.
Taxpayers opting for the Old Tax Regime may continue to claim eligible deductions and exemptions under the Income-tax Act, 1961, including but not limited to:
  1. Deduction under Section 80C for eligible investments.
  2. Deduction under Section 80D for Medical Insurance Premium.
  3. House Rent Allowance (HRA).
  4. Leave Travel Allowance (LTA).
  5. Interest on Housing Loan and other eligible deductions.
The software provides automatic computation and comparison between tax regimes wherever applicable.

7. National Pension System (NPS)
The deduction relating to the employer's contribution to the National Pension System (NPS) continues to be available under the New Tax Regime.
  1. Employer's contribution to NPS shall be allowed as a deduction up to 14% of salary, subject to the provisions of the Income-tax Act.
The eligible deduction shall be considered automatically during tax computation.

8. Family Pension Deduction
The deduction available in respect of Family Pension Income has been enhanced.
  1. Deduction up to ₹25,000 shall be available against Family Pension Income, subject to the prescribed conditions.
The application shall compute the deduction automatically based on the information furnished by the taxpayer.

9. Due Date for Filing ITR-2
The due date for furnishing the Income Tax Return in Form ITR-2 for Assessment Year 2026–27 is as follows:

      
Quote
Subject to extension, if any, notified by the Central Board of Direct Taxes (CBDT).

10. Client Master – Dual Address Management Enhancement
To align with the latest reporting requirements and improve address management capabilities, support for Primary and Secondary Addresses has been introduced.
Individual Status
For taxpayers having the status of Individual:
  1. Residential Address and Office Address shall continue to be available.
  2. The address marked as Default by the user shall be treated as the Primary Address.
  3. The remaining address shall automatically be considered as the Secondary Address.
Non-Individual Status
For all other taxpayer categories:
  1. A new provision has been introduced to maintain both Primary and Secondary Addresses separately.
Validation Rules
  1. Primary Address shall be mandatory.
  2. Secondary Address shall remain optional.
  3. All validations applicable to the Primary Address shall also apply to the Secondary Address.

11. Exempt Income Schedule – Enhanced Reporting
The Exempt Income Schedule has been comprehensively revised to accommodate newly introduced exemption categories and updated schema requirements.
The revised schedule now includes additional exemption categories relating to:
  1. Agniveer Corpus Fund Income
  2. Business Trust Income
  3. National Pension System (NPS) Withdrawals
  4. Specified Funds
  5. Defence-related exemptions
  6. Other notified exempt incomes
Taxpayers shall be required to select the applicable exemption section while reporting exempt income.

List of Available Exempt Income Sections:
  1. 10(30) : 10(30)-subsidy received from or through the Tea Board;
  2. 10(31) : 10(31)-Subsidy received for Rubber/Coffee/Tea replantation, replacement, rejuvenation etc.;
  3. 10(37) : Capital gains on compulsory acquisition of urban agricultural land;
  4. 10(10BB) : 10(10BB)-payments made under the Bhopal Gas Leak Disaster;
  5. 10(10BC) : 10(10BC)-amount from the Central/State Govt./local authority by way of compensation on account of any disaster;
  6. 10(17A) : 10(17A)-Award instituted by Government;
  7. 10(12AB) : 10(12AB)-any sum received as lump sum amount as per clause (vi) of paragraph 2 of the notification number FX-1/3/2024-PR;
  8. 10(15) : 10(15)-Interest on specified securities/investments;
  9. 10(23FBB) : 10(23FBB)-income referred to in section 115UB, accruing or arising to, or received by, a unit holder of an investment fund; 
  10. 10(23FD) : 10(23FD)Unit holder income from Business Trust (certain parts); 
  11. 10(35) : 10(35)-Income from specified Mutual Funds;
  12. 10(35A) : 10(35A)-distributed income referred to in section 115TA received from a securitisation trust;
  13. 10(23FBC) : 10(23FBC) Any income from a unit holder from a specified fund or on transfer of units in a specified fund;
  14. 10(33) : 10(33) Income from transfer of capital asset being a unit of the Unit Scheme, 1964;
  15. 10(4B) : 10(4B)-Interest on specified savings certificates;
  16. 10(4C) : 10(4C)-Interest on Rupee denominated bonds (specific window);
  17. 10(4E) : 10(4E)-Non-deliverable forwards/ODI/OTC with IFSC OBU;
  18. 10(36) : 10(36)-LTCG on certain listed shares (public issue);
  19. 10(37A) : 10(37A)-any income chargeable under the head 'Capital gains' in respect of transfer of a specified capital asset;
  20. 10(12C) : 10(12C)-Agniveer Corpus Fund income;
  21. 10(18) : 10(18)-Pension received by winner of 'Param Vir Chakra' or 'Maha Vir Chakra' or 'Vir Chakra' or such other gallantry award;
  22. 10(19) : 10(19)-Armed Forces Family pension in case of death during operational duty;
  23. 10(23AA) : 10(23AA)-Sum received by any person on behalf of any Fund established by the armed forces;
  24. DMD : Defense Medical Disability Pension;
  25. 10(32) : 10(32)-Minor child's income—small exemption;
  26. 10(43) : 10(43)-Reverse mortgage—payments to senior citizens;
  27. 10(19A) : 10(19A)-Annual value of one palace in occupation of ex-ruler;
  28. 10(26) : 10(26)- Any income as referred to in section 10(26);
  29. 10(26AAA) : 10(26AAA)-Any income as referred to in section 10(26AAA);
  30. 10(10D) : 10(10D)-Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy except sum as mentioned in sub-clause (a) to (d) of Sec.10(10D);
  31. 10(11) : 10(11)-Statutory Provident Fund received;
  32. 10(11A) : 10(11A)-Sum received from an account opened under the Sukanya Samriddhi Yojana;
  33. 10(12) : 10(12)-Recognized Provident Fund received;
  34. 10(12A) : 10(12A)-Any payment from the National Pension System Trust to an assessee;
  35. 10(12AA) : 10(12AA)-any payment from the National Pension System Trust;
  36. 10(12B) : 10(12B)-Any payment from the National Pension System Trust to an Central Govt. Employee;
  37. 10(12BA) : 10(12BA)-partial withdrawal made from the National Pension System;
  38. 10(13) : 10(13)-Approved superannuation fund received;
  39. 10(25) : 10(25)-Sum received by trustees on behalf of approved superannuation, gratuity, or pension funds;
  40. 10(44) : 10(44)-Income received by any person for, or on behalf of, the New Pension System Trust;
  41. 10(2) : 10(2)-Member's share from HUF;
  42. 10(16) : 10(16)-Scholarships for education;
  43. 10(4)(ii) : 10(4)(ii)-NRE account interest;
  44. 10(4)(i) : 10(4)(i)-Interest on specified bonds;
  45. 10(4F) : 10(4F)-Royalty/interest on lease of aircraft/ship by IFSC unit;
  46. 10(4G) : 10(4G)-Portfolio income managed in IFSC OBU accruing outside India;
  47. 10(6B) : 10(6B)-Tax paid under Govt/international agreements (non-salary);
  48. 10(6D) : 10(6D)-Royalty/FTS to non-resident for services to NTRO;
The list of available exemption categories has been updated strictly in accordance with the latest Income Tax Return schema issued by the Income Tax Department.

12. Schedule 80G and Schedule 80GGC – Additional Reporting Requirements
Schedule 80G
To improve traceability and verification of donations, two new optional fields have been introduced:
  1. Transaction Reference Number (UPI / Cheque / IMPS / NEFT / RTGS)
  2. IFSC Code of the Donor's Bank
These fields may be furnished wherever applicable.
Schedule 80GGC
The following new mandatory fields have been introduced:
  1. Name of Political Party
  2. PAN of Political Party
The deduction claim under Section 80GGC shall require these details to be furnished before return validation and filing.

13. Income from Other Sources – New Interest Category
A new reporting category has been introduced under the "Other Interest" section of Income from Other Sources:
New Particular : Others including Interest from Companies, NBFCs and HFCs
The validation shall be enforced during return preparation and schema generation.

14. Gross Income Chargeable at Special Rates
For taxpayers having Non-Resident status, an additional reporting field has been introduced under the Interest Income category.
New Particular : Income received by a Non-Resident as referred to in the second proviso to Section 194LC(1), chargeable under Section 115A(1)(a)(iiaa) at 9%.
The income reported under this field shall be taxed at the applicable special rate as prescribed under the Income-tax Act, 1961.

15. Capital Gains Schedule – Structural Changes
The Capital Gains Schedule has been updated in accordance with the latest schema specifications issued by the Income Tax Department.
Key Enhancements
  1. Capital gain sections previously segregated based on transaction dates (Before 23 July 2024 and On/After 23 July 2024) have been restructured.
  2. The separate display section for transactions on or after 23 July 2024 has been removed.
  3. A unified reporting section has been introduced for the relevant category of capital gains.
  4. Although the separate label is no longer displayed, the underlying tax computation logic, validations, and reporting treatment continue to operate in accordance with the provisions applicable to transactions on or after 23 July 2024.
This enhancement simplifies data entry while ensuring complete compliance with the latest schema and statutory requirements.

All the above amendments and enhancements have been incorporated in Express ITR for Assessment Year 2026–27 to ensure full compliance with the latest Income Tax Department schema, Finance Act provisions, and filing requirements.
Users are advised to update the application to the latest version before preparing or filing returns to take advantage of the updated functionality, validations, and compliance checks.

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