The Union Budget 2025-26 was presented by Union Finance Minister Nirmala Sitharaman in the Lok Sabha today. Chaired by Speaker Om Birla, the Union Budget was off to a hectic start and was full of surprises and shock, specifically in terms of the income tax compliance requirements.
As a form of relief to many, the Union Finance Minister announced a significant extension in the time limit for filing updated income tax returns from the existing period of 24 months to 48 months, thereby providing taxpayers with an extended window to rectify omissions and report correct income.
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Like the rest of the cabinet, the Finance Minister was all praise for Prime Minister Narendra Modi, stating “The Government under the leadership of Prime Minister Modi believes in ‘Sabka Saath, Sabka Vikas, Sabka Vishwas and Sabka Prayas.” The budget speech acknowledged the role of regular taxpayers in staying compliant, with an increase in voluntary compliance seeing a surge in recent years.
Nearly 90 lakh taxpayers had undertaken their income tax compliance requirements; the present changes seek to align themselves with the positive results, further reinforcing the trust placed on taxpayers while encouraging them to undertake their fiscal responsibilities.
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The proposed Finance Bill 2025 amends Section 139(8A) of the Income Tax Act, 1961 extending the window for filing updated returns to 48 months from the relevant assessment year.
The window-extension to 38 months from 24 months for filing belated returns shall be subject to additional tax of 60% for returns filed between 24-36 months and 70% for those filed between 36-48 months.
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Taxpayers may be barred from filing their belated returns if a Section 148A show-cause notice is issued after 36 months from the end of the relevant assessment year, unless deemed unwarranted by an order.
Effective April 1, 2025, these changes promote compliance while ensuring fair contributions from voluntary disclosures.
All things considered, the move, though political or moral, definitely represents a strategic shift in India’s tax administration and gives off the image of enhanced trust between taxpayers and the government, walking hand-in-hand towards nation building.
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