Income Tax Act 2025: ITR-1 & ITR-2 Filing Deadline Extended till March 31 | Budget 2026 Updates

The financial landscape in India is undergoing a monumental shift. With the official rollout of the Income Tax Act 2025, the government has moved to replace the decades-old 1961 Act with a more streamlined, digital-first framework. As part of the recent Budget 2026 announcements, taxpayers have received a significant reprieve: the ITR-1 & ITR-2 filing deadline for revised and belated returns has been extended to March 31.

For the common taxpayer, these changes aren't just about dates; they represent a fundamental change in how we interact with the Income Tax Department. Whether you are a salaried professional or a small business owner, understanding these nuances is critical to avoiding penalties and ensuring smooth compliance.

Understanding the New Income Tax Act 2025 Framework

The Income Tax Act 2025 is designed to simplify the complex web of Indian tax laws. By consolidating sections and removing redundant clauses, the act aims to reduce litigation and make the "Tax Year" (a new term replacing 'Assessment Year' and 'Previous Year') much easier to track for the average citizen.

Structural Changes:

• Uniformity in Language: Simplification of legal jargon to make forms understandable for non-experts.

• Digital-First Approach: Integration of advanced AI and "Virtual Digital Space" monitoring to track high-value transactions.

• The Concept of "Tax Year": A single 12-month period commencing April 1 and ending March 31, simplifying the filing cycle.

ITR-1 & ITR-2 Filing Deadline Extended: What You Need to Know

In a historic move during the Budget 2026 session, the Finance Ministry addressed a long-standing demand from tax professionals. The deadline for filing revised and belated returns for ITR-1 and ITR-2 has been permanently moved to March 31 of the subsequent year.

Breakdown of Filing Deadlines for AY 2026-27

Taxpayer Category	Original Due Date	Belated/Revised Deadline
ITR-1 & ITR-2 (Salaried/Individuals)	July 31, 2026	March 31, 2027
ITR-3 & ITR-4 (Non-Audit Cases)	August 31, 2026	March 31, 2027
Audit Cases (Business/Profession)	October 31, 2026	March 31, 2027
Transfer Pricing Cases	November 30, 2026	March 31, 2027

Previously, the window for correcting errors (Revised Return) or filing missed returns (Belated Return) closed on December 31. Under the Income Tax Act 2025, you now have an additional three months to ensure your financial records are accurate.

Major Highlights from Budget 2026 for Individual Taxpayers

While the extension of the ITR-1 & ITR-2 filing deadline is the headline, Budget 2026 introduced several other reforms that impact your take-home pay and savings.

1. New Tax Slabs for FY 2025-26 (AY 2026-27)

The government continues to promote the New Tax Regime as the default choice. Under the updated structure, the rebate under Section 87A has been enhanced to ensure that individuals with income up to Rs. 12 lakh pay zero tax.

• Up to Rs. 4,00,000: Nil

• Rs. 4,00,001 – Rs. 8,00,000: 5%

• Rs. 8,00,001 – Rs. 12,00,000: 10%

• Rs. 12,00,001 – Rs. 16,00,000: 15%

• Rs. 16,00,001 – Rs. 20,00,000: 20%

• Rs. 20,00,001 – Rs. 24,00,000: 25%

• Above Rs. 24,00,000: 30%

2. Standard Deduction and Senior Citizen Relief

• Standard Deduction: Salaried individuals enjoy a standard deduction of Rs. 75,000, effectively making an income of Rs. 12.75 lakh tax-free under the new regime.

• Senior Citizens: The deduction limit for interest income under Section 80TTB has been increased to Rs. 1 lakh, providing significant relief to retirees.

Compliance and Penalties under the Income Tax Act 2025

Despite the extended ITR-1 & ITR-2 filing deadline, the Income Tax Department has become stricter regarding accuracy. Misreporting or under-reporting income can now attract a penalty of 100% of the tax amount.

If you file a belated return (after July 31 but before March 31), you will still be liable to pay a late filing fee under Section 234F. For total income above Rs. 5 lakh, the fee is Rs. 5,000. For income below Rs. 5 lakh, the fee is Rs. 1,000.

Conclusion

The Income Tax Act 2025 and the subsequent updates in Budget 2026 mark a new era of transparency and ease for Indian taxpayers. While the extension of the ITR-1 & ITR-2 filing deadline to March 31 offers much-needed flexibility, it is always advisable to file your original return by July 31 to avoid late fees and ensure timely processing of refunds. Stay informed, use the official portal for all filings, and take advantage of the simplified rules to plan your finances better.

Frequently Asked Questions (FAQs)

Q1: What is the new deadline for ITR-1 and ITR-2 revised returns under the Income Tax Act 2025?

Under the Income Tax Act 2025, the deadline for filing revised and belated returns for ITR-1 and ITR-2 has been extended to March 31 of the following tax year. This provides taxpayers more time to correct errors or submit missed filings.

Q2: Does the Budget 2026 change the original July 31 deadline?

No, the original due date for filing ITR-1 and ITR-2 remains July 31. The extension to March 31 applies specifically to belated and revised returns.

Q3: Is there a penalty for filing ITR-1 after the July deadline?

Yes, if you miss the July 31 deadline, you can file a belated return until March 31, but you must pay a penalty under Section 234F, which ranges from Rs. 1,000 to Rs. 5,000 depending on your income level.

Q4: How does the Income Tax Act 2025 simplify the filing process?

The Act introduces redesigned, user-friendly forms and consolidates various sections (like TDS provisions under Section 393) to make compliance easier for ordinary citizens without needing extensive professional help.

CTA

• Official E-Filing Portal: Income Tax Department India

• View Official Notification: Finance Bill 2026 PDF

• Check Your Tax Credit: View Form 26AS/AIS