The Finance Bill, 2026 proposes a structured overhaul of timelines related to filing of Income Tax Returns (ITR) with the intent to simplify compliance, reduce procedural disputes and bring uniformity in return filing obligations. Through Clauses 5, 12, 57 and 83, the Bill:
- rationalises due dates for filing original returns,
- extends the window for filing revised returns with safeguards,
- introduces graded statutory fees for delays, and
- replaces discretionary penalties with predictable fee-based consequences.
These amendments are part of the Income-tax Act, 2025 framework and will apply from Tax Year 2026-27 onwards, unless specifically provided otherwise.
Clause 57: Rationalisation of Due Dates for Filing Original Return of Income
Legal Amendment
Clause 57 amends section 263(1) of the Income-tax Act, 2025 to prescribe clear and differentiated due dates based on the nature of the assessee and compliance requirements.
Revised Due Dates under Section 263(1)
| Category of assessee | Applicable condition | Due date |
| Assessees covered under section 172 | Special category | 30 November |
| Companies and assessees requiring audit | Other than section 172 | 31 October |
| Business or profession not requiring audit | – | 31 August |
| All other assessees | Individuals and others | 31 July |
Key Refinement Compared to Earlier Law
- Removes ambiguity caused by frequent extensions.
- Aligns audit cases with realistic completion timelines.
- Provides predictability for compliance planning.
Clause 5: Extension of Time Limit for Filing Revised Return
Legal Amendment
Clause 5 amends section 263(5) of the Income-tax Act, 2025.
Revised Time Limit
- Earlier position: Revised return allowed up to 9 months from the end of the relevant tax year.
- Proposed change: Revised return permitted up to 12 months from the end of the relevant tax year or before completion of assessment, whichever is earlier.
Purpose of the Amendment
- Recognises practical difficulties in identifying errors.
- Encourages voluntary correction without immediate penal exposure.
- Reduces avoidable disputes arising from genuine omissions.
Clause 12: Fee for Filing Revised Return Beyond 9 Months
Legal Amendment
Clause 12 inserts a new section 234-I, introducing a fee for delayed filing of revised returns.
When is the Fee Applicable?
- Revised return filed after 9 months but within 12 months from the end of the relevant tax year.
Fee Structure under Section 234-I
| Total income | Fee payable |
| Up to ₹5,00,000 | ₹1,000 |
| More than ₹5,00,000 | ₹5,000 |
Important clarification: Filing of revised return is not prohibited after 9 months; only a moderate fee is levied to discourage unnecessary delay.
Clause 83: Conversion of Penalties into Mandatory Fees
Legal Amendment
Clause 83 substitutes sections 427 and 428, converting certain procedural penalties into fixed statutory fees.
Section 428 Fee for Delay in Filing Return of Income
| Situation | Income ≤ ₹5 lakh | Income > ₹5 lakh |
| Failure to file return within due date | ₹1,000 | ₹5,000 |
| Belated return filed beyond 9 months | ₹1,000 | ₹5,000 |
✔ Removes discretion
✔ Eliminates penalty litigation
✔ Ensures certainty for taxpayers
Section 427 Fee for Delay in Filing Statements/ Reports
A. TDS / TCS Statements
- ₹200 per day of delay
- Maximum cap: amount of tax deductible or collectible
B. Statement of Financial Transaction (SFT)/ Reportable Account
- ₹200 per day
- Maximum cap: ₹1,00,000
Overall Impact of the Amendments
For Taxpayers
- Clear statutory timelines
- Predictable financial exposure
- Reduced litigation and uncertainty
For Tax Administration
- Faster processing of returns
- Reduced penalty proceedings
- Improved voluntary compliance
Policy Shift
The amendments reflect a clear shift from penal enforcement to a compliance-oriented and fee-based framework.
Applicability and Effective Date
- General applicability: Tax Year 2026-27 onwards
- Clauses 5 and 12: Effective from 1 March 2026, as specifically provided
Conclusion
The rationalisation of return filing timelines under the Finance Bill, 2026 represents a significant procedural reform. By standardising due dates, allowing reasonable correction windows, and replacing penalties with fixed fees, the law seeks to balance administrative efficiency with taxpayer fairness.
For taxpayers, the changes offer clarity, certainty and reduced compliance risk, while strengthening the overall integrity of the tax administration system.
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