New IT law, reforms, exemptions: A list of changes made in the tax laws in Union Budget 2026-2027

Nirmala Sitharaman proposed to increase time limit for filing revised Income Tax return from December 31 to March 31, on payment of nominal fee.

Updated on: Feb 1, 2026, 12:24:43 IST

Edited by Majid Alam

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Finance minister Nirmala Sitharaman on Sunday presented her ninth consecutive budget on Sunday, unveiling a series of reforms and easing of tax rules for the common taxpayers.

Finance Minister Nirmala Sitharaman presents the 'Union Budget 2026-27' in the Lok Sabha, in New Delhi, Sunday, Feb. 1, 2026. (Sansad TV via PTI Photo) (Sansad TV)

Sitharaman said the Income Tax Act 2025 will be implemented from April 1, adding that the rules and tax returns forms will be notified shortly. The finance minister also announced several reforms to the Income Tax rules and increase the time limit for filing revised tax returns.

The government has also raised the penalty for misreporting income, and made provision to tax capit

Meanwhile, buybacks are set to be taxed as capital gains for all shareholders.

Here are some of the changes and reforms announced in the tax system in Union Budget 2026-2027:

In her budget speech, Nirmala Sitharaman proposed to increase time limit for filing revised Income Tax return from December 31 to March 31, on payment of nominal fee.
The finance minister proposed rule-based automated process for small taxpayers in the Union Budget 2026-27.
While speaking on the new Income tax act, the Finance Minister said that the revised tax regime will come into effect from April 1, 2026.In the Union Budget 2025-2026, the government had overhauled the personal income tax regime, exempting those with an income of up to ₹12 lakh. This limit was ₹12.75 lakh for salaried tax payers, due to standard deduction of ₹75,000.
The government has also raised the penalty for misreporting income to 100% of tax amount.
Meanwhile, buybacks are set to be taxed as capital gains for all shareholders.

ABOUT THE AUTHOR
Majid Alam
Majid Alam is a Chief Content Producer working at Hindustan Times, based in New Delhi. He currently heads shifts at online desk and manages homepage apart from writing, editing and curating articles. With over six years of experience in journalism, Majid has navigated national, politics and international news. His work primarily focuses on the politics of the Hindi heartland, government policies, and South Asia. He also writes on US and Europe’s policies vis-à-vis India. Before joining Hindustan Times, Majid worked at ABP LIVE as the Chief Copy Editor and at News18, where he managed the World and Explainers sections. His articles have featured in Dialogue Earth, The Quint, BMJ, The Diplomat, and Outlook India. Majid has a keen interest in the use of data for storytelling. Majid holds a Masters in Convergent Journalism from Jamia Millia Islamia. He was awarded the Erasmus+ scholarship to study International Affairs at Sciences Po, Paris in 2020. He is also part of the OCEANS Network, an alumni network of Erasmus+ exchange scholars. He is currently serving as the National Representative (India) at the OCEANS Network. Apart from journalism, Majid has a flair for academic writing and loves to teach. He has published a book chapter: 'Bombay Cinema and Postmodernism' in the book: 'Handbook of Research on Social and Cultural Dynamics in Indian Cinema.' He was also part of the OCEANS Network delegation to Hanoi National University of Education in Vietnam in 2025. He has also given guest lecture in digital journalism at AJK MCRC, Jamia Millia Islamia.Read More

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