Budget 2026: New Income Tax Law and Its Impact on ITR Filing
In Budget 2026, no changes have been made to the income tax slabs. The government has also confirmed that the new Income Tax Act will come into effect from April 1, 2026.
The following are the impacts of the new Income Tax Act on ITR filing:
New Income Tax Law from April 1, 2026
During the 2026 budget, the finance minister announced that the new Income Tax Act would be effective from April 1, 2026. This law will replace the old 1961 Act. The new rules and forms will be simpler and easier for common people to understand. The aim is to reduce confusion and make tax filing smooth.
Extension for Revised Return Filing
Earlier, revised returns could be filed only till December 31. Now, taxpayers will be allowed to file revised returns till March 31 by paying a small fee. This gives people more time to correct mistakes in their tax returns.
Updated Returns Allowed Even with Lower Losses
Earlier, taxpayers could not file updated returns if they reduced their declared losses. Now, from April 1, 2026, people will be allowed to update their returns even if their losses are reduced. This rule will apply under both old and new tax laws.
One-Time Foreign Asset Disclosure Scheme
The government has announced a special foreign asset disclosure scheme for small taxpayers, including students, professionals, tech workers, and NRIs. Under this scheme, taxpayers can disclose small foreign incomes or assets without facing heavy penalties.
No Change in Regular Filing Date for Individuals
For most individuals who file ITR-1 or ITR-2, the last date will remain July 31. However, people running businesses without audit requirements and trusts will now get time till August 31 to file their returns.
New Rule for Share Buybacks
Budget 2026 proposed that money received from share buybacks will be treated as capital gains. Promoters will have to pay an extra buyback tax. Business promoters will pay around 22% tax, while non-corporate promoters will pay about 30%.
Automatic NIL Deduction Certificates
Small taxpayers who qualify for zero tax deduction will now get NIL deduction certificates automatically through a digital system by the Income Tax Department. This will reduce paperwork and speed up the process.
The new law gives taxpayers more time, flexibility, and clarity. With easier rules and better online systems, filing returns for 2025-26 will become less stressful and more accurate.
