Union Finance Minister Nirmala Sitharaman has announced a major overhaul of India’s income tax system in the Budget 2026. The Income Tax Act, 2025, will replace the decades-old Income Tax Act, 1961, and will come into effect from April 1, 2026.

As part of the reforms, the government has proposed a new rule-based system for small taxpayers, allowing automated lower or nil TDS deduction certificates without the need to approach assessing officers.

In another relief measure, the deadline for revising income tax returns will be extended from 31 December to 31 March, subject to a nominal fee.

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