In a significant move to simplify tax compliance and offer relief to the middle class, Finance Minister Nirmala Sitharaman announced a major overhaul of Income Tax Return (ITR) timelines and overseas remittance costs in the Union Budget 2026. The highlight of the direct tax proposals is a three-month extension for filing revised tax returns, a move that provides taxpayers with a much-needed buffer to correct errors.
ITR Deadlines: From December to March
The Finance Minister proposed extending the window for filing belated and revised returns from December 31 to March 31. This change effectively restores the longer timeline that existed years ago, giving taxpayers until the end of the financial year to rectify omissions upon payment of a nominal fee.
Furthermore, to prevent the perennial “last-minute crash” of the tax portal, the government is staggering the filing deadlines. While individuals filing ITR-1 and ITR-2 will continue to have a July 31 deadline, non-audit business cases and trusts have been granted an extension until August 31.
Relief for Global Learners and Travelers
Addressing a long-standing grievance of families managing overseas education and medical costs, the Budget slashed the Tax Collected at Source (TCS) rates under the Liberalised Remittance Scheme (LRS).
Education and Medical: TCS rates have been reduced from 5% to just 2%.
Overseas Travel: In a surprise move, the 5% and 20% slabs for international tour packages have been replaced with a flat 2% rate, regardless of the amount.
Digitization and Disclosure
The FM also introduced a one-time, six-month foreign asset disclosure scheme specifically tailored for students, tech professionals, and NRIs who may have inadvertently missed reporting small overseas bank accounts or ESOPs.
To further the “Ease of Living,” the government will shortly notify a redesigned, simplified ITR form under the Income Tax Act, 2025. This new regime includes a rule-based automated process for small taxpayers to obtain “nil deduction” certificates and enables depositories to handle Form 15G/15H submissions directly on behalf of investors.