Latest Tax & Financial Changes from 1st July 2026 | Income Tax and GST Updates

With the commencement of July 2026, a number of significant regulatory and financial changes have become effective across India. These updates are expected to affect individual taxpayers, businesses, professionals, and the general public. Whether you are filing your Income Tax Return, managing GST compliance, dealing with TDS/TCS provisions, or using services related to Aadhaar, PAN, or passports, it is essential to stay informed about these latest developments.

1. Passport Fees Revised from 1 July 2026

One of the key changes effective from 1 July 2026 relates to passport services.

The Passport Seva system has introduced a revised fee structure for passport applications.

Some of the important revisions include:

  • The application fee for a fresh 36-page passport has increased from ₹1,500 to ₹2,500.
  • Charges for passport renewal, Tatkal applications, and replacement of lost or damaged passports have also been updated.

Individuals planning to apply for a new passport or renew an existing one should review the latest fee schedule before submitting their application.

2. Quarter-1 TDS and TCS Returns Due by 31 July 2026

With the completion of the first quarter of Tax Year 2026–27 (April to June 2026), the due date for filing quarterly TDS and TCS statements has arrived.

Due Date: 31 July 2026

Tax deductors and collectors are required to submit both TDS and TCS returns by this date. While returns may be filed earlier, 31 July 2026 is the final deadline for Quarter-1 compliance.

3. New TDS/TCS Return Forms and Updated Filing Utility

The Income Tax Department has introduced updated TDS/TCS return forms in line with the new Income-tax framework.

To facilitate return filing for Tax Year 2026–27 onwards, a new Return Preparation Utility (RPU) and Validation Utility have also been released.

Tax deductors should ensure they are using:

  • Latest RPU Version 1.0
  • Updated Validation Utility
  • Revised quarterly TDS/TCS return forms

Utilities applicable to FY 2025–26 should not be used for returns relating to Tax Year 2026–27. Businesses and professionals managing payroll or TDS compliance should update their software without delay.

4. Income Tax Return Filing Due Date for ITR-1 and ITR-2

July continues to be a crucial month for individual Income Tax Return filing.

For taxpayers filing ITR-1 and ITR-2, the due date remains:

31 July 2026

Before submitting the return, taxpayers should carefully verify the following information:

  • Annual Information Statement (AIS)
  • Form 26AS
  • Pre-filled return details
  • Bank account information

Checking these records on the Income Tax e-filing portal helps minimize errors and reduces the chances of receiving notices later.

5. Extended Due Date for ITR-3 and ITR-4 (Non-Audit Cases)

Business taxpayers have received additional time to file their Income Tax Returns.

For taxpayers filing ITR-3 or ITR-4 where a tax audit is not applicable, the due date has been extended to:

31 August 2026

This extension is particularly beneficial for taxpayers such as:

  • Futures & Options (F&O) traders
  • Intraday traders
  • Small business owners
  • Professionals

Considering the extended deadline, tax professionals may focus first on completing ITR-1 and ITR-2 filings during July.

6. Deadline Extended for Filing Appeals Before GSTAT

Taxpayers have also received relief regarding appeals before the GST Appellate Tribunal (GSTAT).

The deadline for filing appeals under Section 112 of the CGST Act has been extended to:

31 July 2026

The extension applies to eligible orders covered under the prescribed conditions, providing taxpayers with additional time to submit pending appeals before the Tribunal.

7. E-Way Bill Enhancements Postponed

GSTN had earlier announced two new features for the E-Way Bill system to improve reporting and compliance.

(a) E-Way Bill Closure Option

A new functionality will allow taxpayers to close an E-Way Bill after the transportation of goods is completed or if the movement does not take place.

(b) Mandatory “Ship To GSTIN”

For Bill-to Ship-to transactions, entering the GSTIN of the actual recipient (Ship To party) will become mandatory wherever applicable.

These enhancements have not yet been implemented. Their rollout has been postponed and is now expected to take effect from 1 August 2026. Until then, taxpayers need not be concerned if these options are unavailable on the E-Way Bill portal.

8. Updated TDS Return Forms Available on the Income Tax Portal

The Income Tax Department has enabled the revised quarterly TDS return forms for Tax Year 2026–27 on the e-filing portal.

Forms introduced under the updated Income-tax framework—including Forms 138, 140, 143, and 144, wherever applicable—are now available for filing.

As the new law has introduced revised section references and reporting codes, taxpayers and deductors should ensure that returns are prepared using the latest prescribed forms and utilities.

9. GST Quarterly Compliance Schedule Begins

With the April–June quarter now completed, several important GST return filings become due during July.

Key due dates include:

GSTR-3B

  • Monthly taxpayers – 20 July
  • QRMP taxpayers – 22 July or 24 July, depending on the State

GSTR-1

  • Monthly filers – 11 July
  • Quarterly filers – 13 July

Other GST returns due during the month include:

  • GSTR-5
  • GSTR-6
  • GSTR-7
  • GSTR-8

Taxpayers are also advised to reconcile purchase data through the Invoice Management System (IMS) Dashboard, which helps match invoices with GSTR-2B and improves the accuracy of GST reporting.

10. Aadhaar Email ID Update Now Free Through the Mobile App

UIDAI has introduced a welcome concession for Aadhaar users.

From 1 July 2026, updating an email ID through the Aadhaar Mobile App is free of cost.

Previously, a fee of ₹75 was charged for this service.

The waiver will remain available for six months. However, it applies only to updates made through the mobile application and not through the online portal.

11. PAN Application Procedure Revised

The process for applying for a Permanent Account Number (PAN) has also been updated under the revised Income-tax framework.

Applicants should keep the following changes in mind:

  • Aadhaar alone may not satisfy all identity or verification requirements.
  • Where proof of date of birth is required, documents such as a Matriculation Certificate or any other approved document may need to be submitted.
  • Applications should be filed using the revised PAN forms notified under the new Income-tax provisions.

Anyone planning to obtain a new PAN should carefully review the latest documentation requirements before submitting the application.

Quick Overview

Update Applicable Date
Passport application fees revised 1 July 2026
Quarter-1 TDS/TCS return due date 31 July 2026
New TDS/TCS forms and filing utilities Now Available
ITR-1 & ITR-2 filing due date 31 July 2026
ITR-3 & ITR-4 (Non-Audit) due date 31 August 2026
GSTAT appeal filing deadline 31 July 2026
New E-Way Bill features Expected from 1 August 2026
GST quarterly return filings July 2026
Aadhaar email update through App Free from 1 July 2026
Revised PAN application process Currently Effective

Conclusion

July 2026 is a crucial month for tax and regulatory compliance. A number of significant changes—including revised passport fees, updated TDS/TCS return procedures, Income Tax Return deadlines, GSTAT appeal relief, GST filing obligations, Aadhaar service updates, and changes to the PAN application process—have come into effect or are scheduled for implementation.

Whether you are an individual taxpayer, business owner, GST-registered entity, accountant, or tax professional, staying informed about these developments is essential. Timely compliance with the latest rules can help you avoid interest, penalties, and unnecessary notices while ensuring that you benefit from the relief measures and new facilities introduced from 1 July 2026.

Income Tax Department Enables ITR-3 for AY 2026-27; ITR-1 to ITR-4 Ready for Filing

ITR-3 Now Available for AY 2026-27: Online Filing & Excel Utility Released

The Income Tax Department has officially activated both the Online Filing Facility and Excel Utility for ITR-3 for Assessment Year (AY) 2026-27. This marks a significant milestone for taxpayers who were waiting for the ITR-3 form to become available before submitting their Income Tax Returns.

Previously, the department had already enabled ITR-1, ITR-2, and ITR-4 in both online and offline modes. However, many taxpayers—including business owners, professionals, freelancers, traders, and individuals earning business or professional income—were unable to file their returns because ITR-3 had not yet been released.

With ITR-3 now available, the majority of individual taxpayers can begin filing their Income Tax Returns for AY 2026-27 without any further delay.

Taxpayers can access the filing portal by visiting www.incometax.gov.in.

Extended Due Date for Certain ITR-3 Filers

Individuals filing ITR-3 who earn income from business or profession and are not required to get their accounts audited can file their Income Tax Return up to 31st August 2026.

Who Should File ITR-3?

ITR-3 is applicable to Individuals and Hindu Undivided Families (HUFs) having income from business or profession, including:

  • Proprietorship business
  • Professional practice
  • Freelancing services
  • Share trading and Futures & Options (F&O) transactions
  • Commission or brokerage income
  • Business income along with income from other sources

In general, taxpayers earning income under the head “Profits and Gains of Business or Profession” should file ITR-3, unless they choose the presumptive taxation scheme and qualify to file ITR-4.

Who Should File ITR-1?

ITR-1 (Sahaj) is meant for resident individuals who satisfy the prescribed conditions and generally have:

  • Income from salary or pension
  • Income from one house property
  • Income from other sources, such as interest
  • Total income within the prescribed eligibility limits

    Who Should File ITR-2?

    ITR-2 is meant for Individuals and Hindu Undivided Families (HUFs) who do not earn income from business or profession but have income from one or more of the following sources:

    • Capital gains arising from the sale of shares, mutual funds, or immovable property.
    • Income from more than one house property.
    • Ownership of foreign assets or receipt of foreign income.
    • Total income that exceeds the eligibility criteria prescribed for filing ITR-1.

      Who Should File ITR-3?

      ITR-3 is designed for Individuals and Hindu Undivided Families (HUFs) earning income from a business or profession. It is generally applicable to taxpayers such as:

      • Proprietors running a business.
      • Professionals, including doctors, lawyers, architects, and chartered accountants.
      • Consultants providing professional services.
      • Freelancers earning income from independent assignments.
      • Traders dealing in shares, Futures & Options (F&O), and other derivatives.
      • Individuals having business or professional income along with salary, capital gains, house property income, or income from other sources.

      Documents Required Before Filing Your Income Tax Return

      To ensure a smooth and accurate filing process, taxpayers should keep the following documents readily available:

      • PAN Card
      • Aadhaar Card
      • Form 16 (where applicable)
      • Form 26AS
      • Annual Information Statement (AIS)
      • Taxpayer Information Summary (TIS)
      • Bank account details
      • Capital gains statements
      • Interest certificates from banks and financial institutions
      • Business financial statements and books of accounts (where applicable)

      Verify AIS, TIS and Form 26AS Before Filing

      Before submitting the Income Tax Return, taxpayers should carefully reconcile the information available in:

      • Annual Information Statement (AIS)
      • Taxpayer Information Summary (TIS)
      • Form 26AS

      These records provide details of various financial transactions, including:

      • Interest income
      • Dividend income
      • Share market transactions
      • Mutual fund investments and redemptions
      • Sale or purchase of property
      • Tax Deducted at Source (TDS)
      • Specified high-value financial transactions

      Matching these details with the information reported in your return helps avoid discrepancies. Any inconsistency may lead to notices from the Income Tax Department, defective return processing, or additional compliance requirements.

      E-Verification is Compulsory

      Filing the Income Tax Return is only one part of the process. Taxpayers must also complete the e-verification of the return within the prescribed time limit.

      A return that is not e-verified within the specified period may be treated as invalid under the provisions of the Income-tax Act, resulting in the return being considered as not filed.

      ITR-3 Now Available Along with ITR-1, ITR-2 & ITR-4

      The launch of ITR-3 for AY 2026-27 has provided significant relief to business owners, professionals, freelancers, traders, and other taxpayers who were waiting for the form to become available before filing their Income Tax Returns.

      With ITR-1, ITR-2, ITR-3, and ITR-4 now enabled in both online and offline modes, the majority of taxpayers can move forward with filing their returns for the current assessment year.

      Before Filing

      • Review AIS (Annual Information Statement)

      • Verify TIS (Taxpayer Information Summary)

      • Reconcile details with Form 26AS

Income Tax Department Opens ITR-1 & ITR-4 Filing for AY 2026–27

Excel Utility & Online Filing Facility Now Available

The Income Tax Department has officially activated ITR-1 (Sahaj) and ITR-4 (Sugam) for Assessment Year 2026–27 on the Income Tax e-Filing Portal. Eligible taxpayers can now begin filing their Income Tax Returns through both:

  • Online Filing Mode
  • Excel Utility (Offline Mode)

available on the official Income Tax e-Filing Portal.

Major Relief for Salaried Individuals and Small Taxpayers

This update brings significant convenience for:

  • Salaried individuals
  • Pensioners
  • Freelancers
  • Small business proprietors
  • Professionals opting for presumptive taxation
  • Taxpayers filing simple income tax returns

Taxpayers can now prepare and submit returns in advance, helping them avoid last-minute technical issues and portal congestion.

ITR Forms Currently Enabled

1. ITR-1 (Sahaj)

ITR-1 is meant for resident individuals having:

  • Salary or pension income
  • Income from up to two house properties
  • Income from other sources such as interest
  • Agricultural income up to ₹5,000
  • Total income up to ₹50 lakh

Who Is Not Eligible to File ITR-1?

ITR-1 cannot be used if the taxpayer has:

  • Capital gains income
  • Foreign income or foreign assets
  • Business or professional income
  • More than two house properties
  • Directorship in a company
  • Investment in unlisted equity shares

2. ITR-4 (Sugam)

ITR-4 applies to:

  • Resident Individuals
  • Hindu Undivided Families (HUFs)
  • Partnership Firms (excluding LLPs)

earning income under presumptive taxation schemes such as:

  • Section 44AD
  • Section 44ADA
  • Section 44AE

with total income up to ₹50 lakh.

Ideal For

  • Small traders
  • Retail shop owners
  • Freelancers
  • Consultants
  • Professionals
  • Small transport operators

Filing Options Available

The department has now enabled both filing methods:

✔ Online Filing

Eligible taxpayers can directly prepare and file their return online without downloading any software or utility.

✔ Excel Utility (Offline Filing)

Taxpayers can also download the Excel utility, prepare the return offline, generate the JSON file, and upload it on the portal.

This option is especially useful for:

  • Chartered Accountants
  • Tax professionals
  • Bulk return filing
  • Detailed verification before submission

Documents Required Before Filing ITR

Taxpayers should keep the following documents ready:

  • PAN Card
  • Aadhaar Card
  • Form 16
  • AIS/TIS
  • Form 26AS
  • Bank statements
  • Interest certificates
  • Investment proofs
  • Home loan statement/certificate (if applicable)

Carefully Verify AIS and Form 26AS

Many taxpayers incorrectly rely only on Form 16 while filing returns.

Before filing, taxpayers should verify:

  • Interest income
  • Dividend income
  • TDS credits
  • Mutual fund transactions
  • Share market transactions
  • High-value transactions appearing in AIS

Any mismatch may lead to:

  • Income tax notices
  • Delay in refund processing
  • Defective return notices

New Tax Regime Continues as Default

For AY 2026–27, the New Tax Regime remains the default tax regime for individual taxpayers.

However, eligible taxpayers may still choose the old tax regime within the prescribed timelines.

Before selecting the regime, taxpayers should compare:

  • Available deductions and exemptions
  • Total taxable income
  • Rebate eligibility
  • Final tax liability

Expected Due Date for Filing ITR

The expected due date for non-audit taxpayers for AY 2026–27 is:

31 July 2026

Taxpayers are advised not to wait until the deadline because:

  • Heavy traffic may slow down the portal
  • Refunds may get delayed
  • Chances of filing mistakes increase near due dates

Advantages of Filing ITR Early

Faster Refunds

Early filers generally receive refunds sooner.

Easier Loan & Visa Processing

Income Tax Returns serve as valid income proof for:

  • Home loans
  • Vehicle loans
  • Business loans
  • Visa applications

Reduced Filing Errors

Early filing gives sufficient time to review and revise mistakes if needed.

Better Financial Planning

Taxpayers get clarity regarding tax payable or refund receivable at an early stage.

Steps to File ITR-1 or ITR-4

Step 1

Visit the Income Tax e-Filing Portal.

Step 2

Login using PAN and password.

Step 3

Navigate to:

e-File → Income Tax Return → File Income Tax Return

Step 4

Select:

  • Assessment Year: 2026–27
  • Relevant ITR Form

Step 5

Choose either:

  • Online Filing Mode
  • Offline Utility Mode

Step 6

Validate all details and submit the return.

Step 7

Complete e-Verification using:

  • Aadhaar OTP
  • Net Banking
  • Demat Account EVC
  • Bank Account EVC

Important Points to Check Before Submission

Before final filing, taxpayers should:

  • Verify bank account details carefully
  • Match TDS credits properly
  • Reconcile AIS/TIS information
  • Review deduction claims
  • Confirm tax regime selection accurately

Filing the wrong ITR form or incorrect reporting of income may result in notices from the Income Tax Department.

Conclusion

The enabling of ITR-1 and ITR-4 for AY 2026–27 marks the beginning of the income tax return filing season for millions of taxpayers. With both online filing and Excel utility options now available, eligible taxpayers and professionals can start filing returns immediately without waiting for the deadline.

Filing returns early not only helps in faster refund processing but also minimizes the risk of errors, mismatches, and notices. Taxpayers should carefully reconcile all income and tax details before final submission of their return.

Key Updates in ITR Forms (ITR-1, ITR-2, ITR-3, ITR-4) for AY 2026–27

For the Financial Year 2025–26, Income Tax Returns will be filed in 2026 as per the prescribed due dates. The government has already notified the updated ITR forms for Assessment Year 2026–27, incorporating several key changes to enhance transparency, ensure better compliance, and improve the accuracy of financial reporting.

ITR Form Formats / Templates

 

 

Income Tax Changes Announced in Union Budget 2026

Direct Tax Proposals in Budget 2026 – Key Highlights

In Union Budget 2026, the Government has announced a wide-ranging and future-oriented set of Direct Tax reforms aimed at simplifying tax laws, reducing disputes, improving compliance, and enhancing India’s appeal as a global investment destination. These measures signal a decisive shift from a complex, enforcement-driven regime to a trust-based, technology-enabled, and taxpayer-friendly tax system, aligned with the vision of Viksit Bharat.

1. New Income-tax Act, 2025 – A Structural Overhaul

One of the most significant announcements in Budget 2026 is the replacement of the Income-tax Act, 1961 with the Income-tax Act, 2025, effective from 1 April 2026.

The new legislation is designed to:

  • Be substantially shorter and simpler, with fewer sections and chapters

  • Use clear and unambiguous language to minimise interpretational disputes

  • Be easier for taxpayers and tax authorities to understand and implement

Simplified Income-tax Rules and redesigned return forms will be notified shortly, enabling individuals to comply without professional assistance.

2. Taxpayer Relief & Ease of Living Measures

The Budget introduces multiple measures to address long-standing taxpayer concerns:

MACT Interest Exemption

  • Interest awarded by the Motor Accident Claims Tribunal (MACT) to individuals will be fully exempt from tax.

  • No TDS will apply, irrespective of the amount received.

Rationalisation of TCS under LRS

  • TCS on overseas tour packages reduced to 2% (from 5% / 20%), without any threshold.

  • TCS on education and medical remittances under LRS reduced from 5% to 2%.

Clarity on TDS for Manpower Supply

  • Manpower supply services classified as contractor payments.

  • TDS rate capped at 1% / 2%, eliminating ambiguity and litigation.

Automated Lower / Nil TDS Certificates

  • Eligible small taxpayers can obtain lower or nil TDS certificates through an automated, rule-based system without Assessing Officer interaction.

Simplification of Form 15G / 15H

  • Depositories authorised to accept declarations centrally and share them with multiple companies, reducing repetitive filings.

3. Rationalised Return Filing Timelines

To ease compliance pressure:

  • Belated and revised returns can now be filed up to 31 March (earlier 31 December) on payment of a nominal fee.

  • Staggered ITR due dates introduced:

    • ITR-1 & ITR-2 (Individuals): 31 July

    • Non-audit cases and trusts: 31 August

4. Relief for Property Transactions Involving NRIs

For purchase of immovable property from a non-resident:

  • Resident buyers are no longer required to obtain a TAN.

  • TDS can be deposited using a PAN-based challan, similar to resident transactions.

5. One-Time Foreign Asset Disclosure Scheme (FAST-DS, 2026)

A special 6-month disclosure window has been introduced for genuine hardship cases involving small taxpayers.

Category A

  • Undisclosed foreign income / assets up to ₹1 crore

  • Payment of:

    • 30% tax

    • 30% additional tax (in lieu of penalty)

  • Immunity from prosecution granted

Category B

  • Foreign assets up to ₹5 crore

  • One-time fee of ₹1 lakh

  • Full immunity from penalty and prosecution

Immunity from prosecution is also retrospectively extended for non-immovable foreign assets up to ₹20 lakh.

6. Rationalisation of Penalty & Prosecution Regime

Key reforms include:

  • Assessment and penalty proceedings to be concluded through a single consolidated order

  • No interest on penalty amounts during pendency of first appeal

  • Pre-deposit for appeal reduced from 20% to 10%, limited to core tax demand

Updated Returns Post Reassessment

  • Taxpayers can file updated returns even after reassessment initiation by paying an additional 10% tax.

Penalty to Fee Conversion

  • Certain technical defaults (audit, TP report, SFT) converted into fee-based non-criminal defaults.

Decriminalisation Measures

  • Minor offences punishable only with fines

  • Maximum imprisonment reduced to two years

  • Penalties graded based on tax evasion quantum

7. Targeted Tax Relief for Cooperatives

  • Deduction extended to supply of cattle feed and cotton seed by primary cooperatives

  • Inter-cooperative dividend income allowed as deduction under the new tax regime

  • Three-year dividend exemption for notified national cooperative federations, subject to redistribution

8. IT Sector Boost & Transfer Pricing Certainty

  • IT and IT-enabled services consolidated under “Information Technology Services”

  • Uniform safe harbour margin of 15.5%

  • Threshold enhanced from ₹300 crore to ₹2,000 crore

  • Automated safe harbour approvals valid for 5 years

  • Fast-track unilateral APA with targeted 2-year resolution

9. Measures to Attract Global Business & Talent

  • Tax holiday till 2047 for foreign cloud service providers using Indian data centres

  • 15% safe harbour margin for data-centre support entities

  • 5-year tax exemption for non-residents supplying capital goods to bonded zone manufacturers

  • Exemption of global income for foreign experts residing in India up to 5 years

  • MAT exemption for non-residents taxed on presumptive basis

10. Tax Administration Reforms

  • ICDS to be merged with Ind-AS from FY 2027-28

  • Definition of “accountant” rationalised to support global expansion of Indian advisory firms

11. Other Key Direct Tax Measures

  • Buyback taxation shifted to capital gains for all shareholders

  • Additional tax for promoters to prevent arbitrage

  • TCS on liquor, scrap and minerals reduced to 2%; tendu leaves from 5% to 2%

  • STT increased on futures and options

  • MAT to become final tax from 1 April 2026, rate reduced to 14%, with limited MAT credit set-off

Conclusion

The Direct Tax proposals in Budget 2026 mark a bold move towards simplicity, certainty, and trust-based taxation. With a new Income-tax Act, substantial compliance relief, rationalised penalties, and strong incentives for investment and global integration, the reforms aim to strike a balance between revenue mobilisation and taxpayer confidence, supporting long-term economic growth.