ITR Filing Property AY 2026-27: A Bengaluru Buyer and Seller Guide

On a Saturday in June 2026 a software engineer in Whitefield logged into the income tax portal expecting a five-minute job and instead found a property purchase sitting in his Annual Information Statement. He had bought a flat for Rs 1.1 crore the previous October, deducted 1 percent TDS, and filed Form 26QB. The portal remembered all of it. The lesson for ITR filing property deals in Bengaluru this season is simple. The income tax return is no longer where you tell the department what happened, but where you confirm what it already knows.

The short answer. The income tax return filing season for AY 2026-27 (financial year 2025-26) is live. For non-audit individuals filing ITR-1 or ITR-2 the due date is 31 July 2026, for non-audit business cases on ITR-3 or ITR-4 it is 31 August 2026, audit cases run to 31 October 2026, a belated return up to 31 December 2026, and a revised return up to 31 March 2027. A Bengaluru property sale must be reported as capital gains, with Section 54 or 54F available if you reinvest, while a purchase above Rs 50 lakh carries 1 percent TDS under Section 194-IA. The trade-off most people miss: correct ITR filing property entries avoid notices, but choosing the new tax regime can wipe out your home-loan interest and principal deductions, so the form you file and the regime you tick must be decided together.

Quick facts for AY 2026-27: in Bengaluru, the standard ITR filing deadline for non-audit individuals is 31 July 2026, property purchases above Rs 50 lakh attract 1 percent TDS under Section 194-IA, and the capital gains reinvestment exemption under Section 54 and 54F is capped at Rs 10 crore, according to the Income Tax Department and ClearTax.

What are the ITR filing property deadlines for buyers and sellers in AY 2026-27?

For AY 2026-27 the core deadline for most individuals is 31 July 2026. That date covers non-audit individuals filing ITR-1 or ITR-2, where most Bengaluru salaried buyers and home sellers land. Non-audit business and professional cases on ITR-3 or ITR-4 get until 31 August 2026, and audit cases move to 31 October 2026. If you miss your slot, a belated return is allowed up to 31 December 2026 with late fees and interest, and a revised return up to 31 March 2027. As of this filing run, no extension has been announced for AY 2026-27, so treat 31 July 2026 as firm. Missing it also restricts your ability to carry forward certain capital losses, which matters if your property sale produced a loss you wanted to set off later.

Which ITR form does a Bengaluru property buyer or seller file?

The form depends on what kind of gain or income the property created, not on the fact that you transacted in real estate. A salaried Bengaluru resident with a capital gain from selling a flat or plot cannot use ITR-1, because ITR-1 excludes capital gains. That taxpayer files ITR-2, which has dedicated schedules for capital gains and house property. If you also run a business or profession, you move to ITR-3. A buyer with no gain to report still files the form that fits the rest of their income, but must be ready to explain the purchase if it surfaces in the Statement of Financial Transactions. Picking the wrong form is a common reason a property-linked return gets treated as defective, so match the form to the gain before you start.

How do I report capital gains on a Bengaluru property sale?

You report a property sale under the capital gains schedule, splitting it into long-term or short-term by holding period. Immovable property held more than 24 months produces long-term capital gains; 24 months or less, it is short-term. You enter the sale consideration, cost of acquisition, cost of improvement, and transfer expenses such as brokerage and registration. For long-term gains, indexation adjusts the cost for inflation, though those rules have shifted in recent budgets, so confirm the method for your acquisition date. Your figure must match the stamp duty value, because the department compares your declared consideration against the registered value and will question a gap. Get the holding period and cost base right first, because every exemption sits on top of that number.

How does Section 54 and Section 54F reinvestment work?

Section 54 and Section 54F let you reduce or remove tax on a long-term gain by reinvesting in a residential house, and both are capped at Rs 10 crore. Section 54 applies when you sell a residential house and buy or build another. Section 54F applies when you sell some other long-term asset, such as a plot or shares, and reinvest the net sale consideration into a residential house. The timing is the same for both: purchase within one year before or two years after the sale, or construct within three years. If you cannot reinvest before your filing date, park the unused gain in a Capital Gains Account Scheme deposit to keep the exemption alive. The trade-off: Section 54F demands you reinvest the entire net consideration, not just the gain, and buying additional residential property within the lock-in can claw it back, so it suits a buyer consolidating into one home, not building a portfolio.

What is the 1 percent TDS under Section 194-IA on a Bengaluru purchase?

If you buy immovable property other than agricultural land for Rs 50 lakh or more, you as the buyer must deduct 1 percent TDS under Section 194-IA. The threshold uses the higher of the sale consideration and the stamp duty value, so a flat registered above Rs 50 lakh triggers it even if you negotiated lower. The buyer deposits the TDS using Form 26QB within seven days from the end of the month of payment, then downloads Form 16B from the TRACES portal for the seller. The deducted amount appears in the seller's Form 26AS and AIS as tax paid. For buyers paying a developer in installments, the 1 percent applies on each installment, and a missing Form 26QB is a frequent trigger for a notice.

How do I reconcile Form 26AS, AIS and SFT property entries before filing?

Reconcile before you file by downloading your Form 26AS and Annual Information Statement and matching every property entry against your records. The AIS now captures high-value transactions reported through the Statement of Financial Transactions, including property registrations and TDS, so a deal you forgot is already visible. Compare the AIS consideration against your sale deed, check the 194-IA TDS credit matches your Form 16B, and confirm any Capital Gains Account Scheme interest is captured. If an entry is wrong, use the portal feedback facility to flag it. An unexplained mismatch between your return and the AIS is the most common path to an automated notice.

Which regime should a Bengaluru buyer pick, old or new?

Pick the regime by testing whether your home-loan deductions beat the lower slab rates of the new regime. Under the new tax regime, the Section 24b home loan interest deduction on a self-occupied house is not available, and the Section 80C principal deduction is also gone. For a Bengaluru buyer paying down a fresh loan, the Section 24b interest of up to Rs 2 lakh plus the Section 80C principal of up to Rs 1.5 lakh can outweigh the rate savings of the new regime, keeping the old regime attractive. For a buyer with a small or repaid loan, the new regime usually wins. Section 54 and 54F survive in both regimes, so they do not tip the choice. Run both calculations on your actual numbers, because the regime is the one decision that changes your tax even when every figure is identical.

For how property registrations surface through SFT reporting and reach your AIS, see our explainer on SFT and AIS property purchase reporting for the Bengaluru buyer. For how the long-term capital gains computation and Section 54 exemption work on a sale, see our guide to LTCG capital gains tax and Section 54 on Bengaluru property.

Official references: the Income Tax Department page on TDS on purchase of immovable property under Section 194-IA, the department's return applicability guidance for AY 2026-27, and ClearTax on the ITR filing due dates for FY 2025-26 and the Section 54F reinvestment rules.

1. Confirm your form before you start: use ITR-2 if you have a capital gain from selling property, not ITR-1.
2. Download Form 26AS and your AIS, then match every property and TDS entry against your sale deed and Form 16B.
3. Compute the gain with the correct holding period (24 months for immovable property) and the cost base including improvement and transfer costs.
4. If reinvesting, check the Section 54 or 54F window of one year before, two years after, or three years to construct, and use a Capital Gains Account Scheme deposit if you cannot reinvest in time.
5. As a buyer above Rs 50 lakh, verify you deducted 1 percent under Section 194-IA, filed Form 26QB within seven days of month-end, and issued Form 16B.
6. Run the tax both ways: old regime with your Section 24b and 80C home-loan deductions versus the new regime slabs, then pick the lower.
7. File by 31 July 2026 if you are a non-audit individual, and keep deeds, Form 16B and CGAS proofs ready in case of a notice.

Do I have to file ITR just because I bought a property in Bengaluru?

Buying a property does not by itself create a filing duty, but a purchase above Rs 50 lakh is reported through SFT and appears in your AIS. If your income otherwise crosses the basic exemption limit, you must file, and the property entry should be consistent with your declared income to avoid an automated notice questioning the source of funds.

I sold a flat and reinvested the gain. Do I still report it?

Yes. You must report the full capital gain in the capital gains schedule of ITR-2 and then claim the Section 54 or 54F exemption against it. The exemption is not automatic. If you have not reinvested by your filing date, deposit the unused gain in a Capital Gains Account Scheme to preserve the claim.

What happens if the TDS in my AIS does not match my records?

A mismatch between the Section 194-IA TDS in your Form 26AS or AIS and your Form 16B should be resolved before filing. Use the AIS feedback option to flag an incorrect entry, and ask the buyer to correct Form 26QB if the error is at their end. Filing on top of an unreconciled mismatch invites a notice.

Can I claim home loan deductions and still use the new tax regime?

No, not for a self-occupied house. Under the new tax regime in Section 115BAC, the Section 24b interest deduction and the Section 80C principal deduction for a self-occupied home are not available. If your loan deductions are large, the old regime may save more, so calculate both.

Last updated 2026-06-24. PropNewz Team.