ITR filing rules revamped from April 1: Deadlines, PAN, ITR U changes explained

New financial year: India’s direct tax framework will undergo a significant transition starting April 1, 2026, as the Income Tax Act, 2025 and Income Tax Rules, 2026 come into force. While the overhaul aims to simplify compliance and modernise procedures, tax experts caution that taxpayers must clearly understand the transition timeline to avoid confusion in return filing.

A crucial distinction lies between the Assessment Year (AY) 2026–27 and the tax year 2026–27. Returns to be filed by July 31, 2026 (for non-audit cases) will still be governed by the existing Income Tax Act, 1961. The new regime will apply to income earned in tax year 2026–27, with returns due in 2027.

Jignesh Shah, Partner – Direct Tax, Bhuta Shah & Co., emphasised that while computation of income for FY 2025–26 will continue under the old law, procedural aspects such as advance tax, TDS payments, and compliance for tax year 2026–27 will shift to the new framework.

Extended deadlines bring relief

One of the key changes under the Finance Act, 2026 is the extension of ITR filing deadlines for certain taxpayers. Non-audit business and professional taxpayers, along with partners of such firms, will now have time until August 31 to file returns, instead of the earlier July 31 deadline. This change aims to ease compliance pressure, particularly for small businesses and professionals.

However, salaried individuals and non-business taxpayers will continue to follow the July 31 deadline.

Shah said: “Earlier, a taxpayer who has filed a return of loss within the prescribed due date can file an updated return only if he / she / it has taxable income to offer making the original return as return of income (and not loss) as well as pay the additional income-tax. However, the post-amendment provision allows the taxpayer to file an updatedreturn of loss, if the loss as per the original return is reduced in the updated return.”

Updated returns get wider scope

The updated return (ITR-U) framework has been significantly liberalised. Taxpayers can now file updated returns even after receiving a reassessment notice, within the prescribed timeline. Importantly, filing such returns with payment of tax, interest, and an additional levy will provide immunity from penalties related to under-reporting or misreporting.

Shah highlighted that the new provisions also allow taxpayers to revise loss returns, provided the updated return reduces the declared loss. This marks a shift from earlier rules, which restricted such revisions.

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Revised return window extended

The timeline to file a revised return has been extended from nine months to twelve months from the end of the relevant tax year. This effectively shifts the deadline from December 31 to March 31.

However, the extended flexibility comes at a cost. Taxpayers filing revised returns after nine months will have to pay a fee of ₹1,000 (for income up to ₹5 lakh) or ₹5,000 in other cases.

Shah said: “The due date for filing a revised tax return was nine months from the end of relevant tax year (i.e., 31 December). The amendment has extended the due date for filing a revised tax return to twelvemonths from the end of relevant tax year (i.e., 31 March). However, the extension of due date comes at a nominal cost of Rs. 5,000 (Rs. 1,000 in case, taxable income is less than Rs. 5 Lakhs) in accordance with fees for default in filing return as prescribed under Section 428(b) of the new ITA [Section 234F of the erstwhile ITA].”

Siddharth Maurya, Founder and MD, Vibhvangal Anukulakara, said: “The new Income Tax Act 2025 together with its accompanying Income Tax Rules 2026 creates fundamental changes in taxation systems while taxpayers require clear knowledge about when these changes occur to prevent misunderstanding. The existing Income Tax Act 1961 framework will still apply to returns submitted on July 31 2026 which pertain to the AY 2026–27 period. The new provisions will only come into play for income earned in tax year 2026–27, with filings due in 2027.”

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PAN compliance

The new rules also rationalise PAN quoting requirements across a range of financial transactions. Thresholds for several transactions have been revised, and the scope has been expanded.

For instance, PAN will now be required for a wider set of high-value transactions, including certain motor vehicle purchases (now including two-wheelers above a specified threshold), higher-value property deals, and event-related payments. At the same time, PAN requirements have been removed for some transactions such as foreign travel payments and purchase of bank instruments, reflecting a calibrated compliance approach.

Major overhaul of tax forms

A notable structural reform is the renumbering and consolidation of tax forms. Key changes include:

Form 16 (salary TDS certificate) becomes Form 130
Form 26AS is replaced by Form 168, with enhanced reporting features
Forms 15G and 15H are merged into a unified Form 121
Tax audit forms (3CA, 3CB, 3CD) are consolidated into a single Form 26

Additionally, new formats for TDS, TCS, and foreign remittance reporting have been introduced, aiming to streamline reporting and improve data standardisation.

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Transition year critical for taxpayers

Experts stress that FY 2026–27 will be a transition phase requiring careful planning. Shah noted that taxpayers must align their compliance systems with the new procedural requirements, especially for TDS filings, advance tax, and reporting obligations under the revised law.

With expanded timelines, flexible return mechanisms, and rationalised reporting structures, the new tax regime seeks to balance ease of compliance with stricter reporting. However, the onus remains on taxpayers to understand the nuances of the transition and avoid misinterpretation during the shift to the new framework.