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India Tax Forms: How ITR-1 Got Simpler, ITR-2 Got Tougher
ITR-1 filers see faster refunds and less data entry; ITR-2 filers face expanded disclosure on foreign assets and crypto. The complexity gap widens ahead of the July 31 deadline.
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India's tax department redrew the two most-used income-tax return forms over the past three assessment years, widening the gap between a simple filing track and a demanding one. ITR-1, used by more than half of the country's 9 crore filers, now requires less data entry and delivers refunds faster. ITR-2, used by filers with foreign assets, crypto gains, or multiple house properties, demands more disclosure and faces sharper scrutiny.
A partner at chartered accountancy firm Venkatesh and Co wrote in a Businessline article that the changes reflect a clear intent: reduce the effort for the majority of taxpayers while adding reporting only where tax policy requires it.
The simplifications for ITR-1 start with eligibility. The Central Board of Direct Taxes allowed filers with long-term capital gains up to ₹1.25 lakh on listed equity to use the simpler form, as long as no carry-forward losses exist. Earlier, any capital gain forced the taxpayer into the heavier ITR-2. For assessment year 2026, the board also permitted income from up to two house properties, against the earlier limit of one. These changes moved a large segment of retail investors onto the simpler form, the article said.
Pre-fill has expanded. Form 26AS, the Annual Information Statement and the Taxpayer Information Summary now populate salary, TDS, savings-account interest, dividends and brokerage-reported capital gains. The taxpayer's job shrinks to review and correct. The article warned that every rupee reported in the AIS finds its way into a Section 143(1) intimation if the return misses it. Mismatches trigger an automated demand, often arriving within weeks of e-verification.
The discard-return facility, available from assessment year 2024 onward, lets a filer who spots an error submit a fresh return before verification, sidestepping the revised-return route. Refund cycles have compressed to under three weeks on average for ITR-1 filers after e-verification, according to department disclosures cited in the article.
For assessment year 2027, the department staggered due dates. ITR-1 and ITR-2 filers have a July 31 deadline. ITR-3 and ITR-4 filers get until August 31. The move aims to avoid a single-day rush.