The Income Tax Return (ITR) filing season for Assessment Year (AY) 2026–27 brings important compliance requirements for Resident and Ordinary Resident (ROR) taxpayers. Individuals holding foreign assets must disclose complete details of overseas investments, bank accounts, shares, financial interests, and other foreign holdings in their income tax returns. As many countries follow the calendar year as their financial year, taxpayers should report foreign assets held up to 31 December 2025, along with foreign income earned and any eligible foreign tax credit claimed. Incomplete disclosure may result in tax notices, penalties, or further scrutiny.
Taxpayers should also carefully select the correct ITR form, particularly those earning business or professional income, to ensure accurate reporting and avoid compliance issues.
Another major point is the choice between the Old Tax Regime and the New Tax Regime. Individuals earning income other than business or profession may switch between the two regimes multiple times. However, taxpayers with business or professional income can shift from the old regime to the new regime only once in their lifetime, making the decision a significant long-term tax planning choice.
Additionally, while gifts between spouses are generally tax-free, any income generated from assets transferred without adequate consideration will continue to be taxed in the hands of the transferor under the clubbing provisions of the Income Tax Act. Tax experts recommend reviewing these rules carefully before filing ITR for AY 2026–27 to ensure full compliance and avoid future disputes.
