India updates income‑tax filing rules for Assessment Year 2026‑27

The Finance Act 2026 amends the Indian Income‑Tax Act, 1961 for assessment year 2026‑27, detailing exemptions and deductions for salaried taxpayers. Key allowances include house‑rent allowance, entertainment allowance, children’s education and hostel expenses, transport allowance for disabled employees, and various capital‑gain exemptions under sections 54‑54GB.

For the same year, the Income‑Tax Department has revised the ITR‑1 (Sahaj) filing process. The form remains for resident individuals with income up to ₹50 million from salary, pension and up to two house properties. New features allow reporting of limited long‑term capital gains (up to ₹1.25 million) and agricultural income up to ₹5,000. The filing deadline is 31 July 2026, with a belated window until 31 December 2026 subject to penalties. Taxpayers must provide standard documents such as Form 16, Form 26AS and housing‑loan certificates, but no physical annexures are required.