Union Budget 2026: FM Nirmala Sitharaman Announces Tax Reforms, Extended ITR Timelines and Foreign Asset Disclosure Scheme

New Delhi: As part of Union Budget 2026, Union Finance Minister Nirmala Sitharaman on Sunday announced key reforms in tax compliance and foreign asset disclosure aimed at easing the burden on taxpayers.

Addressing the measures, Sitharaman said, “I propose to extend time available for revising returns from 31st December to up to 31st March with the payment of a nominal fee. I also propose to stagger the timeline for filing of tax returns – individuals with ITR 1 and ITR 2 will continue to file till 31st July and non-audit business cases or trusts are proposed to be allowed time till 31st August.”

The Finance Minister further unveiled a one-time six-month foreign asset disclosure scheme for a special set of taxpayers, including students who did not disclose overseas assets or income up to Rs 1 crore, and those who did disclose such assets with value up to Rs 5 crore.

Sitharaman also announced reforms to decriminalise minor tax offences. “Non-production of books of accounts and documents, and requirement of TDS payment where payment is made in kind, is being decriminalised. Minor offences will attract only fines, while remaining prosecutions will be graded based on the quantum of offences, entailing only simple imprisonment of a maximum of two years,” she said.

Highlighting taxpayer relief, she added, “There is no penalty presently for non-disclosure of non-immovable foreign assets with aggregate value of less than Rs 20 lakh. I propose to provide them with immunity from prosecution with retrospective effect from October 1, 2024.”

The measures announced in Union Budget 2026 aim to simplify tax compliance, provide flexibility in filing timelines, and encourage voluntary disclosure of foreign assets.