Budget 2026: FM Sitharaman announces revised ITR deadlines, 6-month foreign asset disclosure scheme for taxpayers

Finance Minister Nirmala Sitharaman announced a series of tax measures in her Budget 2026 speech on Sunday, February 1. Presenting her ninth consecutive Budget in Parliament, Sitharaman proposed a revision in deadlines to file Income Tax Returns (ITRs) and a rule-based automated process for small taxpayers, among other initiatives.

In the Budget for FY 2026-27, Sitharaman announced that the deadline for filing ITR-1 and ITR-2 will continue to be July 31. Also, the time available for revising returns has been extended from December 31 to up to March 31, with the payment of a nominal fee.

She also said that the comprehensive review of the Income Tax Act, 1961, has been completed in record time.

“In July 2024, I announced a comprehensive review of the Income Tax Act 1961. This was completed in a record time, and the Income Tax Act, 2025 will come into effect from 1 April 2026,” she said.

“The simplified income tax rules and forms will be notified shortly. Giving adequate time to taxpayers to acquaint themselves with its requirements. The forms have been redesigned such that ordinary citizens can comply without difficulty,” the Finance Minister added.

The Finance Minister also announced a reduction in tax collected at source (TCS) for education and medical purposes from 5% to 2% while announcing the Union Budget 2026.

“I propose to reduce the TCS rate for pursuing education and for medical purposes under the liberalised remittance scheme, popularly known as LRS,” Sitharaman said.

The move is an extension of the announcements that were made in the last budget when the TCS rules were revised significantly. The exemption threshold on foreign remittances was increased from ₹7 lakh to ₹10 lakh per financial year, effective April 2025. TCS on foreign remittances for education funded by loans was also removed.

She also introduces a 6-month foreign asset disclosure scheme for taxpayers, allowing them to disclose income or assets below a certain size. This was expected to address practical issues of small taxpayers like students, young professionals and relocated NRIs.