Tax Planning
Maximizing Benefits Under India’s New Income-Tax Amendment Rules 2026
Recent changes in India’s ITR rules bring opportunities for individuals and small businesses to optimize tax planning—especially around reporting for multiple house properties and treaty-related deductions.
By NomadicTax Research Team • 5-8 min read • August 31, 2026
## Background
On **27 July 2026**, India’s Central Board of Direct Taxes (CBDT) notified the *Income-tax (Third Amendment) Rules, 2026* (Notification 97/2026 [F. No. 370142/11/2026-TPL]) which become effective from **1 April 2026**. These amendments introduce *Form ITR-BN* and amend Rule 332 by adding *Appendix IV* specifically for returns related to *search and requisition cases*.([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/latest-news?utm_source=openai))
Together with that, under the earlier Second Amendment Rules, 2026 (Notification No. 45/2026), Rule 12 has been changed: taxpayers can now claim deductions for **up to two house properties** instead of one under certain sections; and changes to dates in sub-rules to align for AY 2026-27.([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/sites/default/files/2026-04/Notification%20No.45_2026.pdf?utm_source=openai))
## Key Changes & Implications
| Feature | What’s New | Who It Impacts Most |
|---|---|---|
| Reporting in ITR-BN & Appendix IV | Special format for taxpayers subject to search or requisition operations. | High-wealth individuals, those under investigation, or large corporate entities. |
| Two House Properties | Eligible residents can now claim income or loss from **two** house properties instead of being restricted to one. | Owners of multiple properties—rental income, home loans, etc. |
| Change of dates in Rule 12 | Certain thresholds and dates updated. | Impacts planning around the timing of deductions, declarations and election between old/new tax regimes. |
## Practical Tax-Planning Recommendations
- If you own **two residential properties**, evaluate whether reporting both helps reduce taxable income via property losses or interest payments—especially under old/new regime options.
- Taxpayers facing a **search or requisition notice** should prepare to use Form ITR-BN and walk through Appendix IV requirements carefully—missing information here can delay processing or trigger notices.
- Individuals who switch between **old and new tax regimes** should track deadlines to file Form 10-IEA timely in AY 2026-27 if they opt out of default regime. Old regime retains certain allowances and deductions, but once switched away, reversal options are restricted. (Based on ITR-4 rules.)([incometax.gov.in](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/file-itr-4-sugam-online?utm_source=openai))
## Example
Priya has:
- Salary income: ₹ 14,00,000
- Interest and dividends: ₹ 50,000
- Income from house property:
• House A (rental income minus expenses): loss of ₹ 1,50,000
• House B (similar setup): income of ₹ 1,00,000
Under the new option allowing two house properties, she can net these to report a **net loss of ₹ 50,000** which can offset other income—something not possible under old single property restriction.
## Action Steps Before Year End
1. Review all property ownership—if you have more than one house with income or loss, ensure records are ready.
2. If you’re under search or inquiry, consult a tax professional with experience navigating ITR-BN & Appendix IV inputs.
3. Understand whether new or old tax regime gives better post-deduction effective tax rate; simulate both for FY 2025-26 / AY 2026-27.
These amendments don’t necessarily change tax rates significantly—but they widen options, especially around deductions and reporting. Smart planning and documentation will make the difference.