In a major relief for taxpayers, Union Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026-27, announced significant changes to income tax return (ITR) timelines aimed at simplifying compliance and reducing procedural stress. The proposals focus on extending the time available for revising returns and introducing staggered deadlines for filing different categories of returns.
Extended Deadline for Revising Income Tax Returns
One of the key direct tax proposals in the Budget is the extension of the deadline for filing revised income tax returns. At present, taxpayers are required to revise their returns by 31 December of the relevant assessment year. The Finance Minister proposed extending this deadline to 31 March, subject to the payment of a nominal fee.
Announcing the measure in her Budget speech, Sitharaman said the extension would allow taxpayers additional time to correct genuine errors or omissions in their filings without facing harsh penalties. The move is expected to benefit individual taxpayers, small businesses, and professionals who often receive updated financial information such as revised TDS details or late income statements after the December deadline.
The government stated that the measure is part of its broader effort to shift from a punitive tax regime to a facilitative and trust-based compliance framework.
Staggered ITR Filing Deadlines Introduced
In another important reform, the Budget proposed staggering income tax return filing deadlines based on taxpayer categories, moving away from a uniform timeline for all non-audit cases. The revised schedule aims to reduce last-minute congestion on the tax portal and ease the workload for taxpayers and tax professionals alike.
Under the proposed framework:
- ITR-1 and ITR-2 (Individuals): The filing deadline will remain 31 July, maintaining continuity for salaried individuals and taxpayers with simpler income structures.
- Non-audit business cases and trusts: The filing deadline will be extended to 31 August, providing additional time for taxpayers dealing with business income, multiple disclosures, or trust-related compliances.
The staggered approach recognises the differing levels of complexity involved in return preparation across categories and is expected to improve filing accuracy.
Part of a Larger Direct Tax Reform Agenda
These timeline-related reforms form part of the government’s wider direct tax overhaul announced in Budget 2026, ahead of the rollout of the new Income Tax law from the next financial year. The Finance Minister emphasised that simplification, certainty, and ease of compliance remain central to the government’s tax policy objectives.
By extending revision timelines and rationalising filing deadlines, the government aims to reduce litigation arising from inadvertent errors and encourage voluntary compliance.
Read More: New Income Tax Act from April 1, 2026: Know Who Benefits
