Income Tax Updates

FILING SEASON OPENS  |  CBDT  |  15 MAY 2026

ITR-1 and ITR-4 Utilities Now LIVE for AY 2026-27: Excel and Online Filing Enabled, Deadline 31 July

The Income Tax Department announced on 15 May 2026 that the ITR-1 (Sahaj) and ITR-4 (Sugam) utilities for Assessment Year 2026-27 are now live on the e-filing portal, in both Excel offline and online filing modes. These two forms together cover the majority of individual taxpayers in India and unlock the annual filing window for the relevant cohort. ITR-1 (Sahaj) is for resident individuals with total income up to ₹50 lakh from salary or pension, one house property, other sources (interest, dividends), long-term capital gains under Section 112A up to ₹1.25 lakh, and agricultural income up to ₹5,000. ITR-4 (Sugam) is for resident individuals, HUFs and partnership firms (excluding LLPs) with total income up to ₹50 lakh and income from business or profession computed under the presumptive schemes of Sections 44AD, 44ADA, and 44AE.

Three substantive changes in this year's forms warrant attention. First, the capital gains schedule has been bifurcated by 23 July 2024, the date on which the revised rates from Finance Act 2024 came into force; gains arising before that date are reported separately from gains arising after. Second, gains from unlisted bonds and debentures are now classified as short-term capital gains regardless of holding period, again from 23 July 2024 onward. Third, the new forms mandate specifying TDS section codes against each TDS entry, and have removed the option to use the Aadhaar Enrolment ID in lieu of Aadhaar number. Salaried taxpayers should wait for Form 16 issuance (deadline 15 June 2026 under Rule 31 of the Income Tax Rules, 1962) before filing, since Form 16 carries the validated salary breakup and TDS reconciliation. The filing deadline for non-audit cases is 31 July 2026, with utilities for ITR-2, ITR-3, ITR-5, ITR-6, and ITR-7 expected to follow over the coming weeks.

Sources: Business Today — AY 2026-27 ITR-1 and ITR-4 Utilities Available on e-Filing Portal (15 May 2026)  |  Income Tax Department — Downloads (Official Utilities)

GST Updates

REVENUE DATA  |  MINISTRY OF FINANCE  |  1 MAY 2026

April 2026 GST Collections Hit Record ₹2.43 Lakh Crore: Imports Carry the Surge, Domestic Component Slows to 4.3%

India's Goods and Services Tax revenue for April 2026 came in at ₹2,42,702 crore, the highest-ever monthly figure since GST was introduced in July 2017, beating the previous April 2025 record of ₹2,23,265 crore by 8.7% year-on-year. Net of refunds, the collection was ₹2,10,909 crore, up 7.3% YoY. The headline number is structurally significant because April is a "cold start" month for the new fiscal year, unlike March which benefits from year-end reconciliation activity. Beneath the headline, the composition is revealing. GST on imports surged 25.8% YoY to ₹57,580 crore, while domestic GST grew at a modest 4.3% to ₹1.85 lakh crore. Total refunds disbursed rose 19.3% YoY to ₹31,793 crore, driven by a 54.6% jump in domestic refunds even as export refunds contracted 14%.

The numbers reflect the impact of crude oil prices breaching $126 per barrel briefly during the month on the back of West Asia tensions, which mechanically lifts the IGST collected at customs. They also reflect the early signs that the new triple-layer GST regime (IMS hard block, Tax Liability Breakup tab, and ECL-based interest formula) is tightening compliance discipline among regular filers. The slower 4.3% domestic growth is the data point worth watching: it signals that domestic consumption momentum has moderated and that the headline is being carried by imports and tighter compliance, not by an underlying demand surge. The 54.6% jump in domestic refunds reflects accelerated processing of accumulated input tax credit refunds, particularly under the inverted duty structure where credit has been piling up under GST 2.0 rate adjustments. Industry sources indicate that the 57th GST Council meeting, now expected in late May or June, will take up the inverted duty structure refund mechanics and the deferred items from the 56th meeting agenda.

Sources: Themunim — GST Collections April 2026: ₹2,42,702 Crore, Up 8.7% YoY  |  NewsX — India's GST Collection Hits Record ₹2.43 Lakh Crore in April 2026

RBI & Financial Sector

FRAMEWORK  |  RBI  |  FINAL GUIDELINES 29 APR 2026  |  EFFECTIVE 1 JUL 2026

"Unregistered Type I NBFC" Framework Finalised: Smaller Investment Companies Get a Structured Exit Route From the NBFC Net

The Reserve Bank of India has issued final guidelines, dated 29 April 2026, creating a new category called "Unregistered Type I NBFC". The framework exempts non-banking financial companies from registration with the RBI provided three conditions are met cumulatively: (i) the entity does not avail public funds, (ii) it has no customer interface, and (iii) its asset size is below ₹1,000 crore. The exemption applies prospectively, with the regulations coming into effect on 1 July 2026. Crucially, the framework also introduces a structured exit route for the first time: existing NBFCs meeting these criteria have a one-time window until 31 December 2026 to apply for deregistration through the RBI's PRAVAAH portal. The deregistration application must be supported by three years of audited financials, a statutory auditor's certificate confirming the absence of public funds and customer interface, and a board resolution committing that these conditions will be maintained going forward.

The regulator has tightened the definitional boundaries to prevent regulatory arbitrage. Indirect access to public funds, including through group entities, will be treated as public funding, and entities must demonstrate not only present compliance but a forward-looking commitment to maintaining these conditions. Auditors have been given a more active role: any breach of the public-funds or customer-interface conditions must be reported by the auditor directly to the RBI through an exception report. Unregistered Type I NBFCs remain governed by Chapter IIIBB of the RBI Act, 1934, and the central bank retains the power to issue directions if concerns arise. The practical category this opens up is significant: promoter investment companies, family investment structures, treasury entities, and passive holding companies that were previously caught in the NBFC net merely on technical thresholds will now be able to operate without registration, and existing ones can apply for a clean exit. NBFCs with assets at or above ₹1,000 crore in this no-public-funds, no-customer-interface category will be required to register as Type I NBFCs; all others continue under the broader Type II classification.

Sources: Business Standard — RBI Exempts Smaller NBFCs, Creates Structured Exit Route (29 Apr 2026)  |  Business Standard — Equity Market Participation Read-Through (15 May 2026)

FEMA  |  RBI  |  OPERATING FRAMEWORK 14 MAY 2026

Prior RBI Approval Removed for Non-Bank Outward Remittance Tie-Ups With AD-Cat-I Banks: Fintech Remittance Channel Opens

The Reserve Bank of India has issued an operating framework that removes the requirement of prior RBI approval for non-bank entities to enter into tie-up arrangements with Authorised Dealer (Category I) banks for facilitating outward remittance services. The new framework, communicated through an RBI release, allows AD banks to comply directly with the issued instructions when partnering with digital remittance platforms and other non-bank entities, rather than approaching the central bank for each tie-up. The change is specifically for non-trade current account transactions undertaken in online mode, and applies to cross-border outward remittance of funds where a third-party entity acts in collaboration with the AD bank.

For the fintech remittance ecosystem, this is a meaningful regulatory liberalisation. Earlier, every new tie-up had to clear a discretionary approval gate at the RBI, which created an unpredictable on-boarding timeline for new platforms and limited competition. Under the new framework, AD banks shoulder the compliance responsibility for ensuring the partner platform meets the prescribed standards, with onus on the bank to verify customer due diligence, transaction monitoring, and Liberalised Remittance Scheme (LRS) limits. The shift mirrors the broader regulatory direction the RBI has taken under Governor Sanjay Malhotra of moving from ex-ante approval to ex-post supervision on areas that are operationally bounded and where AD banks can be held accountable. Players such as digital remittance platforms operating in the student fees, family maintenance, and small-value foreign currency transfer space stand to benefit the most. Compliance functions at AD-Cat-I banks should align their counterparty due diligence templates with the new framework before signing fresh tie-up agreements.

Sources: Business Standard — RBI Removes Prior Approval for Outward Remittance Tie-Ups  |  Reserve Bank of India — Press Releases

Importance & Applicability

Who each update applies to, why it matters, and the action it triggers.

DIRECT TAX ITR-1 and ITR-4 utilities live for AY 2026-27	APPLIES TO Resident salaried individuals and pensioners with income up to ₹50 lakh (ITR-1). Resident individuals, HUFs and firms (other than LLP) on presumptive taxation under Sec 44AD, 44ADA, 44AE (ITR-4).	WHY IT MATTERS Filing window now open. Capital gains schedule bifurcated by 23 Jul 2024. TDS section codes mandatory. Aadhaar Enrolment ID no longer accepted. Wait for Form 16 (due 15 Jun) for accurate salary filing. Deadline 31 Jul 2026.
INDIRECT TAX GST collections April 2026 record ₹2.43 lakh crore	APPLIES TO All GST-registered businesses. Importers and exporters especially. Inverted duty structure sectors (textiles, EVs, fertilisers) where ITC has been piling up under GST 2.0 rate adjustments.	WHY IT MATTERS Domestic GST grew just 4.3% YoY (vs 25.8% for imports), signalling consumption moderation. Refunds accelerated 19.3% YoY. 57th GST Council meeting (late May or June) expected to take up inverted duty structure refund mechanics.
BANKING & FINANCE Unregistered Type I NBFC framework finalised	APPLIES TO Promoter investment companies, family investment structures, treasury entities, passive holding companies. Asset size below ₹1,000 crore, no public funds, no customer interface. Existing NBFCs that meet the criteria.	WHY IT MATTERS First-ever structured exit route from NBFC net. PRAVAAH portal deregistration window open until 31 Dec 2026 (one-time). Effective 1 Jul 2026. Auditors now required to file RBI exception reports on any breach.
BANKING & FINANCE Outward remittance tie-up prior approval removed	APPLIES TO AD-Category I banks and their non-bank fintech partners. Digital remittance platforms in student fees, family maintenance, and small-value foreign currency transfer space. LRS users indirectly benefit through wider channel choice.	WHY IT MATTERS Onboarding timeline now predictable. AD banks own compliance for partner CDD, transaction monitoring, and LRS limits. Compliance functions at AD banks should align counterparty due diligence templates before signing fresh tie-ups.

KEY COMPLIANCE DEADLINES — MAY TO DECEMBER 2026

20 MAY 2026 — WEDNESDAY GSTR-3B for April 2026 (monthly filers). First full filing cycle under IMS hard block + Tax Liability Breakup tab + ECL-based interest formula.	22 MAY 2026 GSTR-3B for April 2026, Category 1 states (AATO up to ₹5 crore). GSTR-5 and GSTR-5A (NRTP and OIDAR services).
30 MAY 2026 LLP Form 11 Annual Return for FY 2025-26. Form 164 under Sec 507 IT Act 2025 for film, OTT, sports, and event producers (Tax Year 2025-26).	31 MAY 2026 TDS Return Q4 FY 2025-26 (Forms 24Q, 26Q, 27Q, 27EQ) under IT Act, 1961. Form 15CC for FEMA remittances Q4.
15 JUN 2026 Form 16 issuance deadline for salaried employees under Rule 31. First instalment of advance tax for AY 2027-28 (15% of estimated liability).	30 JUN 2026 Form DPT-3 (Return of Deposits) for FY 2025-26. Triennial DIR-3 KYC Web filing under Rule 12A(1).
1 JUL 2026 Unregistered Type I NBFC framework comes into effect. Eligible NBFCs may start PRAVAAH portal deregistration applications.	31 JUL 2026 ITR-1 and ITR-2 for AY 2026-27 (salaried individuals and HUFs, non-audit). ITR-4 for presumptive taxation. DIR-3 KYC late window.

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