Introduction
Income Tax Return filing for Assessment Year 2026-27 has introduced an important practical change in the reporting of exempt income and non-taxable receipts. In earlier years, taxpayers commonly used the “Any Other” option under the exempt income schedule to report receipts that were not taxable, such as gifts from relatives, lump sum alimony, reimbursements, or other capital receipts.
For AY 2026-27, this approach has changed. The “Any Other” option has been removed from the relevant exempt income reporting area, including the salary exemption section and the exempt income schedule. As a result, taxpayers and tax professionals need to be more careful while deciding whether a receipt is reportable in the ITR or should only be supported through documentation.
Statutory Update for AY 2026-27
The notified return framework for AY 2026-27 applies to returns filed for the year. The relevant statutory language states:
“they shall come into force with effect from the 31st day of march, 2026 and shall apply in respect of returns filed for A.Y. 2026-27.”
The notified ITR format also refers to exempt income reporting through a dropdown system:
“Drop down to be provided in e-filing utility mentioning nature of exempt income, relevant clause and section.”
This means exempt income reporting is now more category-driven. Taxpayers should not force-fit a non-taxable receipt into an incorrect section merely because the earlier general option is no longer available.
What Has Changed in Exempt Income Reporting?
Earlier, where a receipt was non-taxable but the taxpayer wanted to disclose it, the “Any Other” option was commonly used. For example, a taxpayer could mention “gift from father” or “lump sum alimony” under the exempt income schedule and enter the amount for reporting purposes.
For AY 2026-27, the form has become more structured. Exempt income is now required to be reported through specific categories and relevant sections. If a non-taxable receipt does not fall under the available categories, the taxpayer may not have a suitable field to report it in the ITR.
| Particulars | Earlier practical approach | AY 2026-27 approach |
|---|---|---|
| Exempt income reporting | “Any Other” option was used | Category-wise reporting |
| Salary exemptions | General option was available | Specific Section 10 options |
| Non-taxable receipts | Often disclosed voluntarily | May not be reportable if no field exists |
| Compliance focus | Disclosure-based | Documentation-based where reporting is not possible |
Treatment of Non-Taxable Receipts
Certain receipts may not be taxable because they are capital receipts or are otherwise outside income tax chargeability. These may include gifts from specified relatives, money received from parents, inherited property, lump sum alimony, reimbursements, or compensation connected with a lawsuit.
The important point is that non-taxable does not mean unsupported. If such receipts are credited to the bank account, the taxpayer should maintain clear records explaining the nature and source of the amount.
| Type of receipt | Practical compliance action |
|---|---|
| Gift from parents or relatives | Keep bank proof and gift deed, wherever applicable |
| Inherited property | Maintain inheritance or transfer documents |
| Reimbursement | Preserve bills, claim details and employer communication |
| Lump sum alimony | Maintain settlement and bank credit proof |
| Legal compensation | Keep lawsuit or settlement documents |
Practical Impact for Taxpayers
The removal of a general “Any Other” reporting option reduces the scope for arbitrary claims under exempt income. This also helps discourage fake exemptions or incorrect refund claims.
At the same time, genuine taxpayers may face a practical issue where a receipt is clearly non-taxable but there is no appropriate field to report it. In such cases, the better approach is to avoid incorrect reporting and maintain proper documents for future explanation.
For income tax filing and advisory support, taxpayers may explore TaxClear’s income tax return filing services.
Key Takeaways
The “Any Other” option for exempt income reporting has been removed for AY 2026-27.
Exempt income reporting is now more category-specific and section-based.
Non-taxable receipts should not be reported under an incorrect category.
Documentation is very important where the receipt is not reportable in the ITR.
Taxpayers should preserve bank records, gift deeds, reimbursement bills, legal documents and settlement papers.
Conclusion
The AY 2026-27 ITR framework requires taxpayers to be more precise while reporting exempt income. Where a receipt fits within a specific exempt income category, it should be reported correctly. Where a genuine non-taxable receipt has no suitable reporting field, taxpayers should not force it into the wrong category.
The key compliance requirement is to maintain a clear audit trail. Proper documentation will help taxpayers explain the nature of non-taxable receipts if any future verification or scrutiny arises.
Have a tax question? Get expert help.