ITR-4 Gets Major Upgrade: Taxpayers Can Now Report Income From Two Properties in One Return

The Income Tax Department has introduced significant changes to the ITR-4 form for the Financial Year 2025-26 (Assessment Year 2026-27), offering greater flexibility and improved reporting options for eligible taxpayers. Among the most notable updates is the ability to declare income from two residential properties within a single ITR-4 filing, a feature that was previously unavailable.

In addition, a new provision has been added to help taxpayers report unrealized rent—rental income that was due but could not be collected from tenants. These changes are aimed at improving transparency and making the tax filing process more practical for property owners.

What Is ITR-4 and Who Can Use It?

ITR-4, commonly known as the Sugam Form, is designed for resident individuals, Hindu Undivided Families (HUFs), and certain partnership firms that opt for the presumptive taxation scheme.

The form can generally be used by taxpayers who:

• Have a total annual income of up to ₹50 lakh.

• Earn income from business or profession under presumptive taxation provisions.

• Receive income from salary or pension.

• Earn limited agricultural income.

• Have income from certain other eligible sources.

The form simplifies return filing for small business owners and professionals by allowing income declaration under presumptive taxation rules.

Taxpayers Can Now Report Two House Properties

One of the biggest changes introduced this year is the expansion of property reporting under ITR-4.

Earlier, taxpayers using ITR-4 could generally disclose income details relating to only one house property. Under the revised format, eligible taxpayers can now provide details of income earned from two residential properties within the same return.

The update is expected to benefit taxpayers who own multiple residential properties and previously faced limitations while filing returns under the simplified ITR-4 framework.

By allowing disclosure of income from two properties, the new form offers a more comprehensive representation of a taxpayer's actual financial position.

New Rules for Partly Self-Occupied and Partly Rented Properties

The revised guidelines also provide clarity for properties that are used partly by the owner and partly rented out.

Under the updated framework:

• The self-occupied portion will be treated according to the rules applicable to self-occupied residential property.

• The rented portion will be assessed separately under the rules governing rental income.