The Income Tax Act, 1961, provides tax filers with several mechanisms to ensure the timely and accurate filing of income tax returns (ITRs). These are late returns, amended returns, and the newly added updated return (ITR-U). While the original return is to be filed on or before the due date under Section 139(1), personal circumstances or genuine errors can cause lapses, delay, or mistakes in reporting. For solving such issues, the Act provides for the filing of a belated return under Section 139(4) in case the return is not filed within time and a revised return under Section 139(5) for correction of errors committed in previous returns. Also, the Finance Act, 2022, introduced ITR-U under Section 139(8A), where taxpayers can file return amendments within 24 months (currently 48 months under Budget 2025) by declaring any unaccounted or lost income. All these steps make India’s expanding tax base more flexible and voluntary in adherence to taxation.
Budget 2025 Update – Extended ITR-U Timeline
The Union Budget 2025 brings in a change allowing for an increased time frame in which to file an ITR-U (Updated Income Tax Return). The period has increased from two years to four years (48 months) after the end date of the respective Assessment Year (AY) to which it relates. This amendment to Section 139(8A) will come into effect from April 1, 2025.
Timeline and Penalty Rates
If filed within 12 months, the extra tax in calculation will stand at 25% plus interest. Between 12-24 months, the charge will be 50%. Between 24-36 months, the extra tax will be put at 60%, along with interest. Extra tax charges, which will stand at 70% plus interest, shall be levied for late filing between 36-48 months.
Practical Deadlines
For instance, the timeline for AY 2022-23 has been extended to March 31, 2028. The deadline for AY 2023-24 will be March 31, 2029.
The additional time frame gives the taxpayer an opportunity to either fix mistakes, address a legitimate revenue loss, or respond to non-filing for a period of four years from the end of the relevant fiscal year.
Why Does It Matter?
Increasing the time limit encourages voluntary compliance since it affords the contractor flexibility, but links the contractor with a high additional tax penalty if the contractor delays in filing. For what can be termed a balance act, it extends the time for the taxpayers without compromising their equity in the system.
What is Form ITR-U (Updated Return)?
Form ITR-U is the new income tax return enacted by the Finance Act 2022 and regulated under Section 139(8A) of the Income Tax Act 1961. It enables taxpayers to voluntarily update their income tax return within a stipulated period, whether they have lost the original or extended filing date or incorrectly reported on a previous return.
The intention of this form is to encourage voluntary tax compliance and prevent litigation by giving taxpayers and enterprises the opportunity to correct any non-reported or wrongly reported income.
Form ITR-U enables taxpayers to rectify previous errors or defaults without fear of severe punishment or investigation if the same is filed within the stipulated period and payment of fees, if any. The step goes a long way in establishing an open and self-sufficient tax culture in India.
Key features:
- Accessible to every taxpayer, personal, company or firm.
- Must be submitted within 24 months (from AY 2025 extended to 48 months) of the end of the concerned assessment year.
- May be submitted irrespective of previous filing status.
- Needs a regular ITR form (ITR-1 to ITR-7), as per the class of the taxpayer and income.
- A single revised return in an assessment year is permitted.
Who is Eligible to File ITR-U?
Any tax payer – individual, Hindu Undivided Family (HUF), company, partnership, Association of Persons (AOP), Body of Individuals (BOI), or any other individual – can submit ITR-U (Updated Income Tax Return) if he/she wants to submit a voluntary revision or update of his/her income tax return for a particular Assessment Year (AY).
When Can You Submit ITR-U?
You can submit Form ITR-U for:
- Missing income
- Erroneous entries
- File a return for the first time if previously missed
However, it cannot be used if the updated return:
- Results in a refund
- Lowers total tax liability
- Involves losses or carry-forward adjustments
Any taxpayer who wishes to correct a hitherto defaulted or erroneous return and is not under investigation or litigation for such AY can submit ITR-U. It’s a once-a-year one-shot facility to file and pay taxes with additional interest and penalty—encouraging compliance in good faith.
Eligibility for ITR-U Filing
You can file ITR-U if you:
1. Did not file the original, late, or amended return for a specific year.
2. Filed prematurely but:
- Left out some income
- Reported amounts incorrectly
- Claimed more than the allowed deductions or exemptions
- Reported carried-forward losses incorrectly
3. Wish to report previously unreported income or correct any factual errors in the initial filing.
4. The purpose is to voluntarily comply and avoid litigation, notices, or fines.
Who Cannot File ITR-U?
You cannot file ITR-U in the following situations:
- Whether the revised return gives rise to a refund or enhances an already issued refund.
- Whether the return lowers the tax liability reported in the previously filed return.
- Whether the revised return is a loss return or an application for bringing forward or set off of losses.
- Whether a search, survey, or assessment case has already been initiated for the relevant AY.
- Whether the tax officer has inputs under other legislations (such as Benami or Money Laundering) for the same year.
- If the updated return is the second one for the same AY (only one update is allowed per AY).
How To File an Updated Return (ITR-U) Online?
Filing of ITR-U (Upgraded Income Tax Return) is a new provision under Section 139(8A) of the Income Tax Act, 1961, which allows taxpayers to modify or amend their income tax returns voluntarily within 24 months after the end of the relevant assessment year. This facility helps taxpayers correct errors or mistakes made in earlier filed returns or file returns that had not been filed.
1. File Preparation
Check eligibility to file ITR-U (see above conditions). Collect financial documents, such as any omitted or revised income. Determine extra tax liability, including interest and extra tax of 25%-50% depending upon ITR-U rules.
2. Login to the Income Tax Portal
Go to https://www.incometax.gov.in. Enter your PAN and password.
3. Select form ITR-U
Navigate to e-File > Income Tax Returns > File Income Tax Return. Select: Assessment year (AY) for which return is being updated. Filed Type as Amendment Return. Available channels for filing are Online and offline through the utility.
4. Select ITR Form Type
Select the right ITR form (ITR-1 to ITR-7) according to your type of income. The ITR-U form is filed along with the regular ITR form.
5. Fill the ITR-U Schedule
This part calls for you to state:
- Why the return is being updated (e.g., income not yet reported).
- When the original return was filed.
- Information about additional income and tax owed.
- Previously paid tax and now owed tax (including 25% or 50% in addition to tax).
6. Pay Due Taxes
The total tax, including:
- Tax on extra income
- Interest under Sections 234A/B/C
- Additional tax: 25% of total tax & interest (if updated within 12 months) or 50% (if updated between 12–24 months)
- Pay by Challan ITNS 280 using proper codes (self-assessment tax).
7. File the Return
Confirm the information, preview the return, and file it. Authenticate the return through:
- Aadhaar OTP, or
- Net banking, or
- Digital Signature Certificate (DSC), or
- Sending signed ITR-V to CPC Bengaluru.
Timeline and Additional Tax as ITR Penalty in ITR-U
The due date for filing the ITR-U (Updated Income Tax Return) is 24 months from the end of the concerned Assessment Year (AY). For example, for AY 2022-23 (FY 2021-22), March 31, 2025, is the due date for filing the ITR-U. If filed within the first 12 months, an extra 25% tax on outstanding tax and interest will be levied. If the filing is made within the next 12 months (13-24 months), the additional tax will be 50%. The extended period allows taxpayers the chance to voluntarily correct any omitted, understated, or unreported income, though under certain conditions and without the right to ask for a refund.
Conclusion
Income tax return filing for the last three years is now available through the ITR-U (Updated Return) facility, which provides taxpayers with a huge opportunity to make voluntary compliance with tax laws. Whether you missed a deadline for filing, reported wrong income, or forgot to report specific incomes, now you can correct these errors without waiting for notification from the Income Tax Department. Under the extension of Budget 2025, the period for filing has been increased to a maximum of 48 months (4 years) after the end of each of the concerned Assessment Years, with additional taxes and interest. This action encourages a cleaner and more equitable tax culture by reducing the likelihood of penalties, inquiries, and litigation. But because there is only one updated return per year, and refund claims or losses are limited, filing sensibly is critical. Act now to amend past returns properly and remain in compliance for a safe financial future.
