ITR-1 AY 2026-27: 2 House Properties Now Allowed — File Before 31 July

The Income Tax Department quietly opened the filing window for AY 2026-27 on 15 May 2026 — weeks before most salaried people even start looking for their Form 16.

The official e-filing portal now hosts both the online utility and the Excel utility for ITR-1 (Sahaj) and ITR-4 (Sugam).

If you're a salaried employee earning under ₹50 lakh a year, ITR-1 is most likely the form you'll file. And this year, it covers more taxpayers than ever — the limits have widened.

This guide walks through what's new in ITR-1 for AY 2026-27, who can (and can't) file it, the documents you need, a step-by-step filing process, and a real example of an Indore-based salaried filer working through it.

Bottom line: ITR-1 Sahaj for AY 2026-27 now allows up to 2 house properties and Section 112A LTCG up to ₹1.25 lakh. The filing window opened on 15 May 2026. Due date for non-audit salaried filers: 31 July 2026. Early filing means cleaner refunds and more time to fix mismatches.

Disclaimer: This article is for educational purposes only and does not constitute investment advice. Munafa Lab is not a SEBI-registered investment advisor or research analyst.

What's New in ITR-1 for AY 2026-27

The most important change isn't a rate cut or a new deduction. It's an eligibility expansion.

Earlier, even a small slice of listed-equity capital gains or a second house pushed taxpayers out of ITR-1 and into the much heavier ITR-2.

That barrier is gone for FY 2025-26 filings.

Here's what changed:

• Two house properties allowed: Earlier limit was one. Now you can declare income or loss from up to 2 properties.
• Section 112A LTCG up to ₹1.25 lakh: Eligible long-term equity gains now fit inside ITR-1.
• Drop-down deductions: Sections 80C to 80U now require exact category selection.
• Aadhaar Enrolment ID removed: Only a valid Aadhaar number is accepted.
• Stronger AIS matching: The portal cross-checks AIS, Form 26AS and TIS before submission.

That last point matters more than people think. If your AIS shows savings-bank interest and you skip it, the portal can instantly flag the mismatch.

Who Can File ITR-1 — And Who Can't

ITR-1 is for resident individuals whose total income for FY 2025-26 stays within ₹50 lakh.

Eligible income sources:

• Salary or pension
• One or two house properties
• Savings interest or FD interest
• Family pension
• Agricultural income up to ₹5,000
• Section 112A LTCG up to ₹1.25 lakh

You cannot use ITR-1 if:

• You're a company director
• You hold unlisted equity shares
• You have short-term capital gains
• LTCG exceeds ₹1.25 lakh
• You own foreign assets or foreign income
• You're an NRI or RNOR
• You have business or professional income
• You have losses to carry forward
• Your income exceeds ₹50 lakh

ITR-1 vs ITR-2: Quick Example#

ITR-1 Works If:#

• Salary income
• FD interest
• One or two properties
• ₹40,000 LTCG from equity SIP

ITR-2 Required If:#

• LTCG exceeds ₹1.25 lakh
• Any short-term capital gain exists
• Foreign stocks or RSUs exist
• Foreign bank accounts exist

Documents You Need Before Filing

Keep these ready before opening the portal:

• Form 16 from employer
• Form 26AS
• AIS and TIS reports
• Savings and FD interest certificates
• PPF / ELSS / LIC / NPS proofs
• Capital gains statement
• Home loan interest certificate
• Rent receipts for HRA claims
• Pre-validated bank account

Important practical tip: Always reconcile salary, TDS and interest income with Form 26AS and AIS before filing.

Step-by-Step: How to File ITR-1 Online

Step 1 — Login#

Visit the official income tax portal and log in using PAN.

Use Aadhaar OTP for faster verification.

Step 2 — Start Filing#

Go to:

e-File → Income Tax Returns → File Income Tax Return

Select:

• AY 2026-27
• Online mode

Step 3 — Select Form#

Choose:

• Status: Individual
• Form: ITR-1 (Sahaj)

Step 4 — Verify Pre-Filled Data#

The portal automatically imports:

• Salary details
• TDS
• Interest income
• Personal details

Review every line carefully.

Step 5 — Add Missing Income#

Commonly missed items:

• Savings interest
• FD interest
• Small bank accounts

Freelance income may shift you into ITR-3 eligibility.

Step 6 — Claim Deductions#

Pick deductions carefully from the drop-down categories.

Match every deduction against actual proof documents.

Step 7 — Compare Old vs New Regime#

The portal automatically compares both tax regimes.

The new regime is default.

Choose old regime manually if it saves more tax.

Step 8 — Verify Refund or Tax Payable#

Check:

• Refund amount
• Self-assessment tax
• Bank account details

Step 9 — Submit and E-Verify#

Complete verification within 30 days using:

• Aadhaar OTP
• Net banking
• EVC

Without verification, the return is treated as not filed.

Old vs New Regime — Realistic Comparison

ParticularsOld RegimeNew RegimeDifference

Gross Salary

₹12,00,000

₹12,00,000

—

Standard Deduction

₹50,000

₹75,000

+₹25,000

80C

₹1,50,000

Not Allowed

Old Wins

80D

₹25,000

Not Allowed

Old Wins

HRA Benefit

₹1,40,000

Not Allowed

Old Wins

Approx Tax

~₹65,000

~₹71,500

Old Saves

For many ₹10–15 LPA salaried employees with home loans and full 80C usage, the old regime still saves more tax in 2026.

Real Example: Mehul from Indore

Mehul works in an Indore-based IT services company.

His annual salary package is ₹9.6 lakh.

Financial Details#

• Salary income: ₹9,60,000
• Interest income: ₹18,400
• LTCG under Section 112A: ₹22,000
• Home loan EMI: ₹14,000/month

Deductions#

• Section 24(b): ₹1,68,000
• 80C: ₹1,50,000
• 80D: ₹22,000

Under earlier rules, Mehul needed ITR-2 because of capital gains.

Now he qualifies for ITR-1 since LTCG stays below ₹1.25 lakh.

He filed the return himself in under 45 minutes and received refund within 19 days.

Common Mistakes Salaried Filers Still Make

Biggest Mistake: Forgetting E-Verification#

If a submitted return is not verified within 30 days:

• The return becomes invalid
• Original filing date is lost
• Late fees may apply
• Refund may get delayed

Other Common Mistakes#

• Ignoring savings-account interest
• Skipping AIS reconciliation
• Choosing wrong tax regime
• Filing ITR-1 despite foreign assets
• Not pre-validating bank account

FAQs

What is the last date to file ITR-1 for AY 2026-27?#

31 July 2026 for salaried non-audit taxpayers.

Can I file ITR-1 with capital gains?#

Yes, but only Section 112A LTCG up to ₹1.25 lakh is allowed.

Is ITR-1 the same as Sahaj?#

Yes. ITR-1 is officially called Sahaj.

Is filing ITR-1 free?#

Yes. Filing directly on the official Income Tax portal is completely free.

Can salaried employees switch tax regimes every year?#

Yes. Salaried individuals without business income can switch between old and new regimes every year.

How long do refunds usually take?#

Normally 2–4 weeks for verified returns without AIS mismatches.

What happens if I miss 31 July 2026?#

You can still file a belated return until 31 December 2026 with applicable late fees and interest.

Final Thoughts

Filing early gives you better control over the process.

Right now:

• Portal traffic is lower
• Refund processing is faster
• AIS mismatches are easier to correct

Download your Form 16, AIS and Form 26AS, set aside one focused hour, and complete the filing calmly before the last-week rush.