New Income Tax Act to come into effect from April 1, ITR filing deadline extended

New Delhi (The Uttam Hindu): Presenting the Union Budget 2026, Finance Minister Nirmala Sitharaman made several important announcements for taxpayers. She stated that the new Income Tax Act will come into effect on April 1, 2026, and that income tax rules have been simplified and made more transparent. A new scheme for small taxpayers has also been proposed, which will simplify tax compliance.

The Finance Minister announced that the deadline for filing ITR-1 and ITR-2 has been extended to July 31st. This will provide significant relief to millions of salaried and small taxpayers. The government says that the tax filing process has been made digital and user-friendly, along with simplifying the forms.

The Finance Minister informed Parliament that the government has fulfilled its promise in 2021-22. According to budget estimates, the fiscal deficit is projected to be 4.4 percent of GDP in 2025-26, and it is expected to decline to 4.3 percent in 2026-27. The government's focus is on accelerating growth while maintaining fiscal discipline.

The budget also included significant announcements for the states. The Finance Minister announced that states will receive grants of ₹1.4 lakh crore in fiscal year 2027. The debt-to-GDP ratio for fiscal year 2027 is set at 55.6 percent, while net borrowing is set at ₹11.7 lakh crore.

In Budget 2026, the government has provided significant relief in TCS rates. The TCS on remittances sent abroad for education and medical treatment under the Liberalized Remittance Scheme (LRS) has also been reduced from 5% to 2%. This will provide relief to families who send money abroad for education or medical purposes.

To clear up confusion in tax rules, the government has clarified that the supply of human resources services will be included in the category of payments made to contractors. Consequently, these services will now attract only 1% or 2% TDS, providing convenience to both businesses and workers.