What Actually Changed in the ITR Forms for AY 2026-27, and What an NRI Has to Do Differently This Year

If you filed last year, open the AY 2026-27 ITR-2 utility expecting muscle memory to carry you through, and you will hit two new walls within the first hour. The first is a column in Schedule TDS that did not exist before, demanding the section under which each deduction was made. The second is the capital gains schedule, where the pre and post 23 July 2024 boxes you spent last June agonising over have simply vanished. Neither change made a headline. Both decide whether your refund clears in six weeks or sits in a queue for six months while the system tries to match a return that no longer matches.

The 30-second answer: For AY 2026-27, the ITR-2 and ITR-3 forms that NRIs file carry four changes that matter. Schedule TDS now has a section-code column where you must state the deduction section, almost always Section 195 for an NRI, and the system reconciles it against your Form 26AS and AIS. The 23 July 2024 capital gains split has been removed because all of FY 2025-26 falls under the new rate regime, though date-of-transfer fields stay for exemptions. Schedule AL now triggers only above Rs 1 crore of total income, up from Rs 50 lakh. Schedule 112A and 115AD dropped their now-redundant rate-split columns, and a new field captures buy-back losses. File ITR-2 by 31 July 2026.

This is a news analysis, not a line-by-line filing manual. The assumption is that you already know you are a non-resident, that you file ITR-2 or ITR-3, and that you understand how your gains are taxed under Section 115AD. What follows is what is genuinely different this year, why each change exists, and the specific things an NRI has to do differently when filling the form, because three of the four changes interact badly with the way NRI income is deducted and reported.

The TDS section-code column is the change that will actually trip you up

Start with the one that affects every NRI, because almost no NRI escapes TDS. In every prior year, Schedule TDS asked for the deductor's TAN, the gross amount on which tax was deducted, and the tax deducted. You quoted the numbers off Form 26AS and moved on. For AY 2026-27 there is a new column: the section under which the tax was deducted. You now have to state, against each entry, whether it was 195, 194-IA, 194A, 194-I or whatever section the deductor actually used.

The reason this exists is reconciliation. The Income Tax Department has spent three years tightening the loop between what a deductor reports in its TDS return, what lands in your Form 26AS and Annual Information Statement, and what you claim in your ITR. The section code is the field that lets the system match the two automatically. When the section you quote agrees with the section the deductor filed, the credit flows through and your refund is computed cleanly. When it does not, the entry gets flagged, and a flagged TDS entry is one of the most common reasons an otherwise correct return sits unprocessed.

Here is why this lands harder on NRIs than on residents. A resident's TDS is a scatter of sections: 192 on salary, 194A on bank interest, 194 on dividends, 194-IA when they sell property. An NRI's TDS is overwhelmingly Section 195, the omnibus section for payments to non-residents. Your NRO interest is deducted under 195. Your dividend on Indian shares is deducted under 195. Your capital gains on mutual fund redemptions are deducted under 195. The buyer of your flat deducts under 195. So the column looks deceptively simple for you, almost everything is 195, but that uniformity is exactly the trap. When ninety per cent of your entries are 195, it is easy to copy 195 into the one entry that was actually deducted under 194-IA or 194-I, and that single mismatched row is the one that holds your return.

Put real numbers on how this goes wrong. Consider Arjun, a UK-resident NRI, who in FY 2025-26 earned Rs 6,00,000 of NRO fixed deposit interest with Rs 1,80,000 deducted at 30% plus cess under Section 195, and separately sold an inherited flat in Pune for Rs 1,40,00,000 on which the buyer deducted Rs 17,50,000 under Section 194-IA at 12.5%. His true tax liability after the capital gains computation and his other income comes to about Rs 8,00,000, so he is owed a refund of roughly Rs 11,30,000. If he fills both Schedule TDS rows as Section 195 out of habit, the property row will not reconcile against the 194-IA entry sitting in his Form 26AS, the Rs 17,50,000 credit gets held for verification, and the refund that actually clears is only the part the system can match, around Rs 2,00,000, with the larger Rs 9,30,000 frozen until he responds to a notice or revises. Had he simply read the section off his 26AS for each row, 195 on the interest and 194-IA on the property, the full Rs 11,30,000 would have been computed in the first pass. The change costs nothing to comply with and a fortune to get wrong.

The practical instruction is narrow and worth repeating. Do not fill the section column from memory or assumption. Download your Form 26AS and your AIS, and for every TDS entry copy the section code exactly as the deductor reported it. Where the AIS and 26AS disagree on the section, which happens, trust the 26AS, because that is the TRACES-sourced figure the processing system reconciles against. If a deductor has used the wrong section in their TDS return, the fix is to get them to revise it, not to quietly enter what you think it should be. The mechanics of reading these two statements are covered in Form 26AS and AIS for NRIs, and the broader question of recovering over-deducted tax sits in TDS for NRIs and refunds.

The 23 July 2024 split is gone, and that is mostly good news

Last filing season, AY 2025-26, was the ugliest capital gains return in years. Finance Act 2024 changed the rates from 23 July 2024 onward, so FY 2024-25 was a split year: gains on transfers up to 22 July 2024 ran at the old rates, 10% long-term and 15% short-term, and gains from 23 July onward ran at the new 12.5% and 20%. The forms forced you to bifurcate every capital gain into a pre and post box, recompute each at its own rate, and hope the totals tied out. For an NRI juggling mutual fund redemptions, share sales and maybe a property transfer across that pivot date, it was genuinely error-prone.

That bifurcation has been removed for AY 2026-27. The logic is clean: the entire previous year, FY 2025-26, falls after 23 July 2024, so there is no old-rate period left to separate out. Every gain in the year runs at the current rates, 12.5% long-term and 20% short-term under Sections 112A and 115AD, with no pre-July box to fill. The capital gains schedule is correspondingly simpler than the version that gave everyone grief last year.

This is where you have to be careful about a half-truth doing the rounds in commentary. "The dates are removed" is not accurate, and a CBDT clarification confirmed as much when the forms were notified. What was removed is the transitional rate split. What stays, and stays mandatory, are the date-of-transfer fields wherever timing drives an outcome. You still enter the acquisition date and the sale date for land or building. You still enter dates for any gain where an exemption depends on them, because the date is what proves you qualify: Section 54EC requires reinvestment in NHAI or REC bonds within six months of transfer, Section 54F has its own purchase and construction windows, and Section 115F, the NRI-specific reinvestment relief, asks for the date of transfer of the original foreign exchange asset and the date you reinvested the net consideration. Remove those dates and the exemption fails validation. So the honest framing is that the form got simpler in one specific way, the rate bifurcation, while every date that an assessing officer would actually want to see remains in place.

For an NRI selling property, this distinction is the difference between a clean exemption and a denied one. Take Priya, a US-resident NRI, who sold a Bengaluru flat held since 2014 for a long-term gain of Rs 60,00,000 in October 2025 and reinvested Rs 50,00,000 in REC capital gains bonds in December 2025. Under Section 54EC she shelters Rs 50,00,000 of the gain, leaving Rs 10,00,000 taxable at 12.5%, about Rs 1,25,000 plus surcharge and cess. That exemption only holds if the schedule shows the sale date in October and the bond investment date in December, inside the six-month window. If she treats "the date split is gone" as "dates are gone" and leaves the fields thin, the utility cannot validate the 54EC claim, and the Rs 50,00,000 she carefully reinvested gets taxed anyway, a swing of roughly Rs 6,25,000 in tax for a data-entry omission. The split disappearing makes the form less fiddly; it does not make the dates optional. The full mechanics of how NRI property and equity gains compute are in the capital gains guide.

Schedule 112A and 115AD lost columns, and NRIs should know which one is theirs

Closely tied to the rate change is a cleanup inside the two scrip-wise schedules. Schedule 112A is the listed-equity long-term gains schedule that residents and NRIs share, and Schedule 115AD(1)(iii) proviso is the parallel schedule that non-residents use for the same listed-equity long-term gains under their own charging section. Both carried columns last year that supported the pre and post 23 July 2024 rate split. Those redundant columns have been removed for AY 2026-27, which is the same simplification as above, just expressed inside the scrip-wise tables.

The point worth internalising as an NRI is which schedule is yours. When you redeem equity mutual funds or sell listed shares held over twelve months, your long-term gain is charged under Section 115AD, not under 112A, even though the rate, 12.5% above the Rs 1.25 lakh annual exemption, is identical. The utility expects non-residents to populate the 115AD(1)(iii) proviso schedule. If you enter your listed-equity gains in the resident 112A schedule because that is the one every YouTube walkthrough demonstrates, the figures may still total correctly, but you have reported under a section that does not match your status, and that kind of mismatch is precisely what invites a query. The grandfathering rule for shares acquired on or before 31 January 2018 still applies inside the 115AD schedule exactly as it does in 112A, so the scrip-wise fair-market-value entry remains for pre-2018 holdings.

The arithmetic is unchanged from prior years, so this is a placement issue rather than a calculation one. If you sold Rs 8,00,000 of equity mutual fund units held three years with a cost of Rs 5,00,000, your long-term gain is Rs 3,00,000, the first Rs 1,25,000 is exempt, and Rs 1,75,000 is taxed at 12.5%, about Rs 21,875 plus cess. That number is the same whether you key it into 112A or 115AD. What differs is whether the return reconciles cleanly with the section under which your mutual fund registrar deducted TDS, which, again, was Section 195 read with 115AD. Reporting the gain under 115AD and the TDS under 195 keeps the whole chain internally consistent, and consistency is what gets a return processed without a human looking at it.

Schedule AL now starts at Rs 1 crore, which lets a lot of NRIs off the hook

The Assets and Liabilities schedule, Schedule AL, requires you to list your assets and the liabilities against them once your income crosses a threshold. For years that threshold was Rs 50 lakh of total income. For AY 2026-27 it has been doubled to Rs 1 crore. Below Rs 1 crore of total income you no longer fill Schedule AL at all.

This is a real simplification for a specific and sizeable group of NRIs: those with a couple of let-out Indian properties, some capital gains and dividend income, whose total income lands in the Rs 50 lakh to Rs 1 crore band. Last year they had to itemise their Indian immovable property, jewellery, financial assets and the loans against them. This year, if they stay under Rs 1 crore, that entire schedule is off the table. For NRIs in particular this is welcome, because the schedule's interaction with foreign-held assets was always a source of confusion, even though Schedule AL for a non-resident only ever concerned Indian-situated assets.

Two qualifications keep this from being a free pass. First, the trigger is total income, computed before Chapter VI-A deductions, not the value of your assets. So it is your income for the year that decides whether you fill the schedule, and a single large transaction can flip you over. An NRI whose ordinary Indian income is Rs 30 lakh but who sells a property for a Rs 90 lakh gain in the same year crosses Rs 1 crore of total income and lands back in Schedule AL, listing assets, for that year only. Second, this threshold is unrelated to Schedule FA, the foreign asset schedule, which NRIs do not file at all. Schedule FA is only for taxpayers who are Resident and Ordinarily Resident; a non-resident or an RNOR is outside it entirely. People conflate the two because both involve listing assets, but Schedule AL is Indian assets above an income threshold and Schedule FA is foreign assets for RORs, and the two move independently. If you are an NRI returning to India and crossing into ROR status, the foreign side is the one to study, and that is in Schedule FA foreign asset reporting.

The buy-back field, and the smaller changes worth a glance

Two further changes round out the picture. Finance Act 2024 shifted the taxation of company share buy-backs from 1 October 2024: buy-back proceeds are now taxed in the shareholder's hands as a deemed dividend under income from other sources, while the cost of the bought-back shares becomes a capital loss you can set off and carry forward. The capital gains schedule for AY 2026-27 adds a field to capture exactly this buy-back loss, so that the loss has a home in the return rather than being orphaned. For an NRI who tendered shares into a buy-back during FY 2025-26, this matters: the proceeds go into other-sources income and are taxed there, often with TDS under Section 195, and the corresponding capital loss goes into the new buy-back field where it can shelter other capital gains. Miss the field and you have declared the income but thrown away the loss, paying tax twice in effect.

The smaller items are administrative but not trivial for someone filing from abroad. The forms across the board now capture a secondary address, a secondary mobile number and a secondary email, separately from the primary contact details. For an NRI this is genuinely useful: you can record your overseas address and number alongside an Indian one, which matters when the department's communications, including refund and verification intimations, need to reach you, and when an Indian mobile for OTP-based verification is hard to keep active from overseas. Use the secondary fields rather than leaving a stale Indian number that you cannot receive an OTP on, because e-verification failure is a quiet way to have a filed return treated as never filed.

Edge cases

Your deductor used the wrong section. If a bank or a property buyer deducted under a section that does not match the nature of the income, the section-code column forces the contradiction into the open. You cannot fix it by entering the "correct" section in your ITR, because then your return disagrees with the 26AS the system reconciles against. The only clean fix is to ask the deductor to revise their TDS return so the 26AS itself is corrected, then file once it updates. This is slower, which is one more reason not to file in the first week the utility opens.

A split-year residency. If FY 2025-26 was the year you returned to India for good, your status may be RNOR rather than non-resident, and that changes which schedules bind. RNOR still keeps you out of Schedule FA, but your global income treatment, your eligibility to use certain reliefs, and the way foreign income interacts with the return all shift. The form changes described here apply regardless of which of the two non-ROR statuses you hold, but the surrounding return is different, so do not assume last year's structure carries over if your status changed.

Gains straddling the old split, realised late. A rare but real case: if you have a delayed or disputed transaction whose effective date of transfer falls before 23 July 2024 but which only crystallised into your FY 2025-26 return through some adjustment, there is no pre-July box to put it in this year. The form assumes everything in the year is post-July. If you genuinely have an old-rate item surfacing this year, that is a CA conversation, not a form-filling one, because the utility will not offer you the old rate.

Small LTCG and the wrong form. ITR-1 and ITR-4 were widened to allow listed-equity LTCG up to Rs 1.25 lakh under Section 112A. This does not help NRIs, because non-residents cannot file ITR-1 or ITR-4 at all. If a preparer suggests the simpler form because your gains are small, that advice is for residents; you remain on ITR-2 or ITR-3 regardless of how modest the numbers are.

The closing read

The honest read is that AY 2026-27 is a quieter filing year than AY 2025-26 was, and most of the changes cut in the NRI's favour, with one sharp exception. The 23 July 2024 split going away removes the single most error-prone part of last year's return. Schedule AL moving to Rs 1 crore takes a whole band of NRIs out of asset reporting. The scrip-wise schedules are leaner. None of that is the thing to lose sleep over.

The thing to get right is the TDS section-code column, because it is new, it is mandatory, and it interacts with the one feature of NRI income that residents do not share: almost everything you earn is deducted under Section 195, and the one row that is not, your property sale under 194-IA or your rent under 194-I, is the row that will freeze your refund if you fill it on autopilot. So for the common case, an NRI with NRO interest, some dividends or mutual fund redemptions, and perhaps one property transaction, the recommendation is simple and specific. Wait until mid-June or later so your AIS and Form 26AS are fully populated, then fill the section-code column by reading each entry straight off your 26AS rather than from memory, report your listed-equity gains under the 115AD proviso schedule rather than the resident 112A schedule, and keep your transfer dates intact even though the rate split is gone. Do those four things and the new reconciliation engine works for you. The exception who should not self-file is the NRI with a large property sale, a buy-back, or a residency change in the year; that is the point to pay a chartered accountant, because the form is simpler this year but the consequences of a mismatched section or a missing date are not.

Related guides

• Budget 2026: what changed for NRIs
• The Income-tax Act 2025 and its NRI impact
• ITR filing for NRIs: the AY 2026-27 guide
• Capital gains tax for NRIs on shares and mutual funds
• Schedule FA: foreign asset reporting
• TDS for NRIs and how to claim refunds
• Form 26AS and AIS for NRIs
• All News and analysis
• All Taxation guides

This guide is educational and general in nature and is not individual tax advice. The AY 2026-27 ITR forms were notified in early 2026 and the utilities are being updated through the filing season, so specific fields and validation rules can change after publication. Capital gains, residency and TDS outcomes depend on your exact transactions, dates and status, so confirm your position with a qualified chartered accountant before you file.