ITR-2 for foreign pension: Many people who came back to India after working abroad may need to stop using the simple ITR-1 form for Assessment Year 2026-27. The Income Tax Department says ITR-1 is only for resident individuals other than Resident but Not Ordinarily Resident, and it is meant for people whose total income is up to ₹50 lakh from salary, pension, house property and a few other allowed items. The official tax department guidance also says taxpayers with any foreign assets or foreign income should not use the simplest return forms.
This means that if a person still has overseas assets, foreign income, or control over an account outside India, ITR-1 is not the right form. The department’s return guidance says forms for individuals with foreign assets or foreign-source income are different, and the simpler forms do not have the needed reporting space for those details.
Income Tax Returns: How to Access, File and Submit Your ITR-1 Form Online
What form to use instead?
For many such taxpayers, ITR-2 becomes the next choice as long as they do not have income from business or profession. The Income Tax Department says ITR-2 is for individuals and Hindu Undivided Families who have income under heads other than business or profession. The ITR-2 user manual also says this form has Schedule FSI for income from outside India, Schedule TR for foreign tax relief, and Schedule FA for foreign assets.
The same manual says Schedule FSI is for income that comes from any source outside India, and Schedule FA is for foreign assets or income from outside India. It also says Schedule FA does not need to be filled by a Non-Resident or a Resident but Not Ordinarily Resident. For taxpayers claiming relief for tax paid abroad, the department also uses Form 67 within the allowed time.
Clubbing Of Income In ITR: When Your Spouse’s Investment Income Becomes Your Tax Liability
Why Residential Status Matters?
The first thing a returning taxpayer should check is whether they are Resident and Ordinarily Resident, Resident but Not Ordinarily Resident, or Non-Resident. The department’s guidance says the foreign-asset reporting rules apply to residents, while Schedule FA is not required for NR or RNOR taxpayers.
So the same person can have a different filing duty depending on their residential status for that year.
That is why people coming back from overseas work should not pick a return form too fast. If they still have foreign assets or foreign-source income, the safer path is usually to check the residential status first, then see whether ITR-2 is needed instead of ITR-1. The tax department’s current forms and guidance for AY 2026-27 are built around those disclosure rules.
