India's Union Budget 2026 Overhauls Tax Return Forms and SGB Tax Rules

The 2025 Union Budget, implemented for Assessment Year 2026‑27, introduces major revisions to India’s income‑tax return (ITR) forms. Revised tax slabs raise the basic exemption to ₹4 million and add a 5‑30 % progressive scale. The Section 87A rebate is increased from ₹25,000 to ₹60,000, widening the pool of taxpayers with nil liability. Eligibility for ITR‑1 and ITR‑4 is expanded to include income from up to two house properties, and a new field for unrealised rent is added. Tenant details (PAN or TAN) must now be disclosed where tax is deducted under Sections 194‑IB and 194‑I. Reporting of foreign retirement‑benefit accounts is removed from ITR‑1 and ITR‑4, and the “Others” category for exempt allowances is eliminated.

In parallel, the taxation of Sovereign Gold Bonds (SGBs) changes from April 2026. Capital‑gains exemption at maturity applies only to the original subscriber who holds the bond to redemption; secondary‑market buyers will face long‑term capital‑gain tax of 12.5 % after 12 months or short‑term tax at ordinary slab rates if held shorter. The 2.5 % annual interest on SGBs remains taxable under “Income from Other Sources”. No new SGB issuances are scheduled for FY 2026‑27, effectively pausing the scheme.

These measures aim to simplify compliance, enhance revenue, and tighten verification, affecting a broad segment of Indian taxpayers and investors.