ITR Filing Deadline & Income Tax Act 2025 Changes: What Investors Must Know

As the 31 August deadline approaches, taxpayers with business or professional income should make sure they file the correct Income Tax Return (ITR) for Assessment Year (AY) 2026-27. The Income Tax Department has specifically reminded non-audit taxpayers to complete their filings on time, while recent changes to India's direct-tax framework are also attracting attention.

For investors, traders, freelancers and professionals, the distinction between salary income, business income, capital gains and presumptive income is particularly important because it determines which ITR form should be used.

What is happening

The Income Tax Department has reminded taxpayers with business or professional income who are not subject to tax audit to file their applicable ITR for AY 2026-27 by 31 August 2026.

As of 20 August 2026, more than 6.5 crore ITRs had been filed for AY 2026-27. This included more than 2 crore ITR-3 and ITR-4 returns, while more than 5.9 crore ITR-1 and ITR-2 returns had already been filed by the 31 July deadline.

For taxpayers with business or professional income, the applicable return can be ITR-3 or ITR-4 in the case of eligible individuals and HUFs. Other non-audit taxpayers may fall under ITR-5 or ITR-7 depending on their legal status and type of

At the same time, India is transitioning to the Income Tax Act, 2025. However, this new Act should not be confused with the AY 2026-27 filing currently underway. The current AY 2026-27 return relates to FY 2025-26, while the Income Tax Act, 2025 takes effect from 1 April 2026 and applies to the tax year beginning from that date.

Key facts and data

The background you need

Choosing the correct ITR form is one of the most important parts of filing an income-tax return.

For AY 2026-27, ITR-3 is generally applicable to individuals and HUFs having income under the head "Profits and Gains of Business or Profession" who are not eligible to use ITR-1, ITR-2 or ITR-4. The Income Tax Department specifically identifies business and professional income as the key basis for ITR-3.

ITR-4 (Sugam) is a simplified return available to eligible resident individuals, HUFs and firms other than LLPs with total income up to ₹50 lakh where business or professional income is computed on a presumptive basis under Sections 44AD, 44ADA or 44AE, subject to the form's other eligibility conditions.

What about salaried taxpayers with trading or freelance income?

A salaried person does not automatically have to use ITR-3 simply because they receive a salary.

The correct form depends on the nature of the additional income and whether the taxpayer satisfies the eligibility conditions for ITR-4. Business or professional income, including eligible trading or freelance activity, can take the taxpayer outside the scope of ITR-1.

For example, the Income Tax Department's ITR-3 validation rules specifically contain reporting fields for intraday trading and Futures & Options (F&O) trading, confirming that these activities are dealt with within the business-income framework of the return.

However, it is not accurate to say that every salaried person with F&O or freelance income must automatically file ITR-3. An eligible taxpayer may be able to use ITR-4 where the prescribed presumptive-taxation conditions are satisfied; otherwise ITR-3 may be applicable.

Understanding presumptive taxation

Presumptive taxation is designed to simplify compliance for certain eligible businesses and professionals.

Under the applicable provisions, eligible taxpayers can calculate taxable business or professional income on a prescribed presumptive basis instead of maintaining their accounts in the same manner as taxpayers reporting actual business profits.

For AY 2026-27, ITR-4 covers eligible presumptive income under Sections 44AD, 44ADA and 44AE, subject to the conditions specified by the Income Tax Department.

What is changing under the Income Tax Act, 2025

The new Income Tax Act, 2025 introduces a new legislative framework, but its timing needs to be understood correctly.

The Act comes into effect from 1 April 2026. Therefore, provisions under the new Act should generally be discussed in the context of the tax year beginning on or after that date, rather than being described as changes to the AY 2026-27 return covering FY 2025-26.

One important change concerns income covered by Sections 102 to 106 of the new Act. Government legislative material states that the tax rate on such income was proposed to be reduced from 60% to 30% under Section 195 of the Income Tax Act, 2025, effective from 1 April 2026.

These provisions cover areas corresponding to unexplained credits, investments and related unexplained amounts under the new framework.

This is different from saying that the AY 2026-27 return filed in August 2026 receives a new 30% rate. The two tax periods should be kept separate when explaining the change to readers.

What this means for investors

For investors and traders, the biggest practical takeaway is that income classification matters.

A normal investment in listed shares can generate capital gains, while activities such as intraday trading and F&O are dealt with under the business-income framework. The appropriate ITR therefore depends on the actual nature of the activity and the taxpayer's eligibility for the relevant return form.

A salaried investor who occasionally buys and sells shares for investment purposes is not automatically treated in the same way as someone carrying on a trading business. This distinction is important when preparing the return.

Taxpayers should also reconcile their information with documents such as Form 16, Annual Information Statement (AIS), Taxpayer Information Summary (TIS), bank statements and broker statements before submitting the return.

What to watch next

• 31 August 2026 deadline: Non-audit taxpayers with applicable business or professional income should complete their AY 2026-27 return by the prescribed deadline.

• Correct ITR selection: Taxpayers should determine whether ITR-3, ITR-4 or another applicable form is appropriate based on their income and eligibility.

• Trading income reporting: Investors with intraday or F&O activity should reconcile their trading statements and report the activity under the applicable business-income provisions.

• Transition to the new tax framework: The Income Tax Act, 2025 applies from 1 April 2026, so taxpayers should distinguish its provisions from those governing AY 2026-27.

• E-verification: After filing, taxpayers should complete the required verification process within the prescribed period. The Income Tax Department has specifically highlighted e-verification as part of the filing process.

Frequently asked questions

What is the ITR filing deadline for non-audit business taxpayers for AY 2026-27?

The due date for taxpayers with business or professional income who are not required to undergo a tax audit is 31 August 2026, subject to the applicable return category.

Which ITR should a salaried person with F&O or trading income use?

It depends on the nature of the activity and the taxpayer's eligibility. Business or professional income generally falls under ITR-3, while eligible taxpayers using presumptive taxation may be able to file ITR-4. ITR-1 is not available for profits and gains from business or profession.

Can a freelancer file ITR-4?

An eligible resident individual can use ITR-4 when the professional or business income is computed under the applicable presumptive taxation provisions and all other ITR-4 eligibility conditions are satisfied. Otherwise, ITR-3 may be applicable.

Does the Income Tax Act, 2025 apply to AY 2026-27?

The distinction is important. AY 2026-27 relates to FY 2025-26, while the Income Tax Act, 2025 comes into effect from 1 April 2026. Therefore, the new Act should not simply be described as changing the tax treatment of the AY 2026-27 return.

What changed regarding tax on unexplained income under the new Act?

Government legislative material states that the tax rate on income covered by Sections 102 to 106 of the Income Tax Act, 2025 was reduced from 60% to 30%, effective from 1 April 2026. The treatment of penalties and other consequences must be considered separately under the new framework.

How many ITRs had been filed by 20 August 2026?

The Income Tax Department reported that more than 6.5 crore ITRs had been filed for AY 2026-27 by 20 August 2026, including more than 2 crore ITR-3 and ITR-4 returns. More than 5.9 crore ITR-1 and ITR-2 returns had already been filed by the 31 July deadline.

This article is published for educational and informational purposes only and does not constitute financial, tax, legal or investment advice. Tax treatment depends on the taxpayer's individual circumstances. Readers should refer to the applicable law and official Income Tax Department guidance or consult a qualified tax professional before making filing decisions.