AY 2026-27 Returns Stay Under 1961 Act Despite Tax Law Transition

What changes for AY 2026-27

Taxpayers filing income-tax returns for Assessment Year 2026-27 must continue to follow the Income-tax Act, 1961, notwithstanding the transition to the Income Tax Act, 2025 from 1 April 2026. The controlling factor is the period in which the income was earned, rather than the date on which the return or a subsequent correction is filed.

The Income Tax Department’s Income Tax Returns FAQs clarify that income earned during FY 2025-26 belongs to AY 2026-27 and remains governed entirely by the 1961 Act. This treatment extends to original returns, belated returns, revised returns, updated returns and related proceedings for that assessment year.

The clarification addresses an important transition-year concern. An AY 2026-27 return will ordinarily be filed after the new Act has come into force, but that timing does not move the return into the new statutory framework. Taxpayers and return preparers must therefore distinguish AY 2026-27 compliance from compliance relating to income earned during FY 2026-27, described as Tax Year 2026-27 under the new law.

Belated return deadline remains 31 December 2026

A taxpayer who misses the applicable original return-filing due date for AY 2026-27 may furnish a belated return under section 139(4) of the Income-tax Act, 1961. According to the Department’s FAQ, the belated return must be filed on or before 31 December 2026 or before completion of the assessment, whichever occurs earlier.

The qualification concerning completion of assessment is significant. The calendar date is not an unconditional window available in every case: if the assessment is completed earlier, the right to furnish the belated return ends at that point.

Delayed filing can also attract the fee prescribed by section 234F. The Department states that the fee is Rs 1,000 where total income does not exceed Rs 5 lakh and Rs 5,000 in other cases. Interest, restrictions or other consequences may separately arise depending on the taxpayer’s facts and the nature of the return. The belated-return facility should consequently be treated as a remedial option, not as an extension of the original statutory due date.

Revised return governed by section 139(5)

Where a taxpayer discovers an omission or a wrong statement in a return already furnished for AY 2026-27, the revision continues to be governed by section 139(5) of the 1961 Act. The Department’s FAQ says that a revised return may be filed before the expiry of the relevant assessment year—31 March 2027 for AY 2026-27—or before completion of the assessment, whichever is earlier.

The FAQ, however, marks the 31 March 2027 position as proposed in the Finance Bill, 2026. Tax professionals should therefore verify the finally enacted provision and any associated conditions before relying on the extended period. The Department’s separate return-filing guidance also indicates that, from AY 2026-27, a revised return filed after 31 December and up to 31 March may involve an additional fee under section 234I.

This distinction matters operationally. The last date for a belated return and the period stated for revising an eligible return are not presented as identical. Firms should not assume that the availability of a later revision window permits an unfiled original return to be submitted after the belated-return deadline.

Old forms continue for the old assessment year

AY 2026-27 returns are to be filed through the ITR forms applicable under the 1961 Act. Taxpayers must select AY 2026-27 on the e-filing portal for income earned during FY 2025-26. The familiar form series—ITR-1 through ITR-7—continues for this purpose, subject to the form appropriate to the taxpayer and the notified requirements for that assessment year.

The portal is expected to support forms under both statutory frameworks during the transition. Old-law forms will continue to be used for AY 2026-27 and earlier years where a filing remains legally permissible, while forms under the Income Tax Rules, 2026 will apply to Tax Year 2026-27 under the new Act.

This parallel operation does not mean that a taxpayer files two annual returns for the same income. Income earned during FY 2025-26 is reported for AY 2026-27 under the 1961 Act. Income earned during FY 2026-27 falls within Tax Year 2026-27 under the 2025 Act, with its return obligation arising after that tax year ends.

Updated returns remain available under the old Act

The statutory transition also does not shift an updated return for AY 2026-27 into the new Act. Such a return remains governed by section 139(8A) of the Income-tax Act, 1961, including the applicable time limit, eligibility restrictions and additional-tax requirements.

The Department illustrates the point with a taxpayer who files an original AY 2026-27 return in July 2026 and discovers omitted income in January 2028. The taxpayer may use the updated-return mechanism under the old Act, subject to section 139(8A). Filing the ITR-U after commencement of the new law does not alter the governing legislation because the return relates to a period beginning before 1 April 2026.

An updated return is not interchangeable with a revised return. Its availability is subject to statutory limitations and additional tax, and it generally cannot be used simply to reduce tax liability, increase a refund or enhance a declared loss. Practitioners should therefore identify the nature of the error and the relief sought before choosing between revision and the updated-return route.

Why the two laws operate together

The new framework replaces the concepts of “previous year” and “assessment year” with a single “tax year” for income earned from 1 April 2026. That drafting change does not retrospectively convert FY 2025-26 or AY 2026-27 into a tax year under the new Act.

Transitional continuity is necessary because return filing, assessment, reassessment, rectification, appeals, refunds and penalties frequently continue long after the year in which the underlying income arose. Consequently, the repeal of the 1961 Act does not invalidate or migrate every earlier-year matter. Proceedings connected with periods beginning before 1 April 2026 continue under the old law in accordance with the transition provisions.

The same division applies to tax payments. Self-assessment tax pertaining to AY 2026-27 is associated with the 1961 Act, whereas advance tax for income of Tax Year 2026-27 falls under the 2025 Act. Taxpayers making payments or responding to portal prompts should check the year and governing Act carefully rather than selecting the law solely by reference to the payment date.

Practical steps for taxpayers and return preparers

Tax practices should maintain a clear year-wise distinction in engagement files, computation software and internal deadline systems. AY 2026-27 work papers should cite the 1961 Act provisions, use the corresponding ITR form and track 31 December 2026 as the belated-return deadline, subject in every case to earlier completion of assessment.

Where a filed return needs correction, advisers should determine whether section 139(5) remains available and verify the enacted deadline and fee implications. If that route is closed, they should separately test eligibility for an updated return under section 139(8A), rather than assuming that ITR-U can produce the same outcome as a revision.

The transition also increases the risk of procedural errors on the portal. Choosing Tax Year 2026-27 when the intended filing relates to income earned during FY 2025-26 would place the compliance in the wrong statutory period. The income period, selected filing year, form, section and tax-payment classification should therefore be cross-checked before submission.

Key takeaway

For income earned during FY 2025-26, AY 2026-27 returns and later corrections remain under the Income-tax Act, 1961: a belated return is due by 31 December 2026 or earlier completion of assessment, while the stated 31 March 2027 revised-return position should be checked against the finally enacted Finance Bill, 2026 provisions before reliance.