Union Budget 2026: FM proposes extending revised ITR filing deadline to March 31

Finance Minister Nirmala Sitharaman on Sunday proposed extending the deadline for filing revised income tax returns offering relief to taxpayers who miss earlier cutoff dateshttpswwwmiddaycomnewsindianewsliveblogunionbudget2026liveupdatesfinanceministernirmalasitharamanfullunionbudgetspeechhighlightsfromparliament18331577Presenting the Union Budget 2026 in the Lok Sabha Sitharaman said the time limit for submitting revised income tax returns would be extended from December 31 to March 31 subject to the payment of a nominal fee The move is aimed at providing taxpayers with greater flexibility and reducing compliancerelated stressIn another taxpayerfriendly announcement the Finance Minister proposed a reduction in the Tax Collected at Source TCS rate under the Liberalised Remittance Scheme LRS for education and medical purposes The TCS rate for remittances made for pursuing education or medical treatment abroad will be lowered from 5 per cent to 2 per centSitharaman also announced a cut in the TCS rate on overseas tour packages Under the proposal the rate will be reduced to 2 per cent from the existing 5 per cent Notably the levy on such tour packages had earlier been as high as 20 per cent before being rationalisedAs part of efforts to simplify tax administration the Finance Minister said the government plans to introduce a rulebased automated process for small taxpayers in the 2026ndash27 financial year This initiative is intended to minimise discretionary interventions speed up resolution of cases and enhance transparency in dealings with the tax departmentIn a significant relief measure Sitharaman also proposed exempting compensation awarded by the Motor Accident Claims Tribunal from income tax removing ambiguity over the tax treatment of such awards and providing direct benefit to accident victims and their familiesThe proposed measures form part of the governmentrsquos broader effort to make the tax system more taxpayerfriendly reduce litigation and improve ease of compliance while maintaining revenue neutralityIncome tax law comes into force from April 1 FMMeanwhile Finance Minister Nirmala Sitharaman said the Income Tax Act 2025 will be implemented from April 1 and rules and tax returns forms will be notified shortlyBeginning April 1 the Income Tax Act 2025 will come into force replacing the sixdecadeold tax law and the changes made in tax laws in 202627 Budget will be incorporated in the new legislationIn her Budget speech in the Lok Sabha on Sunday she said This direct tax code was completed in record time and the Income Tax Act 2025 will come into effect from first April 2026 The simplified income tax rules and forms will be notified shortly giving adequate time to taxpayers to acquaint themselves with its requirementsThe forms have been redesigned such that ordinary citizens can comply without difficulty she addedThe 2025 IT law is revenue neutral with no change in tax rates It has only made direct tax laws simple to understand removed ambiguities thereby reducing scope for litigations It reduces text volume and sections by about 50 per cent visavis the 1961 Income Tax ActThe new law simplifies the tax timeline by doing away with the distinction between the assessment year and the previous year replacing it with a single tax year framework It also allows taxpayers to claim TDS refund even when ITRs are filed after deadlines without any penal charges