Budget 2026: Extend ITR filing due date for belated and revised returns, suggests ICAI (Here's why)

In its Pre-Budget Memorandum 2026, the Institute of Chartered Accountants of India (ICAI) has recommended extending the time limit for filing belated and revised income tax returns, citing that the current window is too short for taxpayers to identify and correct errors.

The ICAI memorandum refers to Section 263(4) and Section 263(5) of the proposed law [corresponding to Sections 139(4) and 139(5) of the Income-tax Act, 1961].

As stated in the memorandum: “As per section 263(4), if any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any tax year at any time within nine months from the end of the relevant tax year, or before the completion of the assessment, whichever is earlier.”

It further states: “As per section 263(5), if any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time within nine months from the end of the relevant tax year, or before the completion of the assessment, whichever is earlier.”

Issue highlighted by ICAI

ICAI pointed out that the above provisions restrict the time limit for filing belated and revised returns to nine months (31 December) from the end of the relevant tax year, in line with the current timeline under Sections 139(4) and 139(5) of the Income-tax Act, 1961.

The memorandum notes: “The additional time to file a belated return and a revised return is too short.”

It further explains: “Earlier, time limit was within 12 months (31st March) of the end of the relevant assessment year. Many taxpayers may only become aware of errors or omissions in their return during the course of assessment proceedings. By this time, the window for filing a revised return has already closed.”

ICAI’s suggestion for Budget 2026

ICAI has suggested restoring the longer timeline for compliance.

“It is suggested that the due date for filing a belated and revised return under section 263(4) and section 263(5), respectively, be extended to at least twelve months from the end of the relevant tax year (i.e., 31st March of the subsequent tax year) instead of nine months from the end of the relevant tax year.”

As Abhishek Soni, CEO and co-founder of Tax2win, recently pointed out: “A permanent shift of the due date to 31st August would improve compliance and reduce stress for taxpayers.”

At the same time, concerns over delayed income tax refunds remain high. Deloitte India, in its Budget 2026 suggestions, has called for a real-time refund tracking dashboard to improve transparency and reduce anxiety among taxpayers.

If the government accepts ICAI’s recommendation in Budget 2026, taxpayers could benefit from:

• More time to identify and correct genuine errors

• Reduced risk of penalties due to technical or timing issues

• Better alignment with fixed due dates and faster refund processing

Whether these recommendations find a place in the Union Budget will be closely watched by both taxpayers and tax professionals on February 1, when FM Nirmala Sitharaman will present her Budget speech