Lok Sabha Passes Finance Bill 2026, Introduces Increased IT Appeal Thresholds and Extended Filing Period

Finance Bill 2026 Passes in Lok Sabha

On March 25, 2026, the Lok Sabha passed the Finance Bill 2026, introducing key changes to income-tax litigation thresholds and compliance provisions. The bill aims to simplify compliance and reduce the burden of litigation on taxpayers and businesses.

Appeal Thresholds Raised

The income-tax appeal thresholds have been increased across judicial forums. The Income Tax Appellate Tribunal (ITAT) threshold has been raised to ₹60 lakh from ₹50 lakh, while the threshold for high courts has been increased to ₹2 crore from ₹1 crore and for the Supreme Court to ₹5 crore from ₹2 crore. This change will help reduce the number of cases in courts and ease pressure on appellate forums.

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Updated Return Framework Expanded

The Finance Bill 2026 expands the scope of the updated return mechanism, extending the time limit for filing such returns to 48 months. Taxpayers can now file updated returns even after initiation of reassessment proceedings and correct previously filed updated returns, including adjustments related to losses.

New Income Tax Act to Simplify Compliance

The Income Tax Act 2025 will come into effect from April 1, 2026 and is designed to simplify compliance. The Act simplifies language, reduces forms, and is designed to enable the average taxpayer to understand their obligations without professional help.

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Key Objectives

The changes introduced in the Finance Bill 2026 aim to improve compliance by giving taxpayers more flexibility to rectify errors and reduce the burden of litigation. The government has also rationalised thresholds for monitoring and filing appeals as part of a broader effort to streamline tax administration.