The Union Budget 2026 has introduced a taxpayer-friendly yet disciplined reform by extending the time limit for filing a revised return, while contemporaneously introducing a figure for delayed modification beyond a specified period. 

Existing Legal Position 

Under Section 263 (5) of the Income-tax Act, 2025 (corresponding to Section 139(5) of the Income-tax Act, 1961), a revised return could be filed within nine months from the end of the applicable tax time or before completion of assessment, whichever was earlier. 

Since the time limit for filing a delinquent return was also nine months, a taxpayer filing a delinquent return at the end of this period was left with no occasion to revise the return, indeed to correct genuine errors or deletions. 

What’s Proposed in Budget 2026 

To address this practical difficulty, Budget 2026 proposes to 

• Extend the time limit for filing a revised return from 9 months to 12 months from the end of the applicable tax year, or before completion of assessment, whichever is earlier. 
• Introduce a figure for revised returns filed after 9 months, but within the extended 12- month period. 

Proposed figure for Delayed Revised Return 

A figure is proposed under Section 428(b) of the Income-tax Act, 2025(corresponding to the recently introduced Section 234- 1 of the Income-tax Act, 1961) as follows 

• 1000, where the total income doesn’t exceed 5 lakh 
• 5000 in other cases 

This figure will apply only when the revised return is filed beyond 9 months, but within the extended 12- month window. 

Applicability

The extended timeline and figure vittles will apply to 

• former Time 2025- 26(Assessment Year 2026- 27) under the Income-tax Act, 1961; and 
• Tax Year 2026- 27 onwards under the Income-tax Act, 2025. 

Impact and Takeaway 

This correction strikes a balanced approach 

• It provides a fresh time for taxpayers to correct genuine miscalculations. 
• It discourages gratuitous detainments by introducing a moderate figure; 
• It particularly benefits taxpayers who file delinquent returns at the end of the admissible period. 

Overall, the reform enhances fairness, inflexibility and compliance discipline, aligning procedural law with practical realities.