Key Income Tax Act 2025 Provisions and AY 2026-27 Compliance

The Income Tax Department has released crucial updates regarding the new Income Tax Act, 2025, and its implications for Assessment Year (AY) 2026-27, alongside directives for updated and belated returns. Taxpayers need to be aware of the distinctions between different assessment and financial years, as well as the specific forms and timelines applicable.

New ITR Forms and Compliance

New Income Tax Return (ITR) forms under the Income Tax Rules, 2026, are set to be notified by the Government well in advance of the due dates for filing returns for Tax Year 2026-27. These forms will be made available on the e-filing portal, which will support compliances under both the old and new Acts simultaneously.

Tax Audit Report for FY 2025-26 (AY 2026-27)

For Financial Year (FY) 2025-26, which corresponds to AY 2026-27, the tax audit report must be filed in the prescribed forms (Form 3CA/3CB/3CD as applicable) under the Income Tax Act, 1961 (the old Act). This applies even if the actual filing occurs after April 1, 2026. The due date for furnishing the tax audit report for AY 2026-27 is typically one month before the ITR due date, for instance, September 30, 2026, for cases where the ITR due date is October 31, 2026, and October 31, 2026, for transfer pricing cases with an ITR due date of November 30, 2026.

Updated Returns (ITR-U) Under Income Tax Act, 2025

Section 263(6) of the Income Tax Act, 2025, introduces provisions for filing updated returns (ITR-U). Key aspects include:

• Filing Period: An updated return can be filed within forty-eight months from the end of the financial year succeeding the relevant tax year.
• Applicability: It is available irrespective of whether the person has furnished an original, belated, or revised return.
• Restrictions: The updated return cannot result in an enhanced loss, a decrease in total tax liability, or an increase in refund.
• Limitation: Only one updated return can be filed per tax year.

Belated and Revised Returns for Earlier Years

The deadline for filing revised or belated returns for AY 2025-26 or earlier assessment years expired before April 1, 2026. Consequently, such returns cannot be filed after this date. However, taxpayers may still file an updated return (ITR-U), subject to the time limits prescribed under Section 139(8A) of the old Act.