The Central Board of Direct Taxes (CBDT) has introduced a revised version of the Income Tax Updated Return form, known as ITR-U
Understand how the Finance Act, 2025, changes the way you can update past income tax returns—along with the penalties and restrictions involved.
The Central Board of Direct Taxes (CBDT) has introduced a revised version of the Income Tax Updated Return form, known as ITR-U. This updated form provides taxpayers with an extended window of four years to rectify or revise their previously filed income tax returns. The change aligns with amendments effective from April 1, 2025, as outlined in Budget 2025.
What Has Changed?
The Finance Act, 2025, has amended Section 139(8A) to significantly extend the time limit for filing an updated return. Previously, taxpayers had 24 months from the end of the relevant assessment year (AY) to file an updated return. Now, this period has been doubled to 48 months, offering greater flexibility and encouraging voluntary compliance by allowing individuals and businesses to correct any omissions or inaccuracies in their earlier tax filings.
The ITR-U form offers a second chance to taxpayers who may have failed to file a return or need to report additional income. It provides a way to set things right—even years after the original deadline.
How to File an ITR-U
Under the revised rules, an updated return can be filed only after the end of the relevant assessment year. For example, for the financial year 2024–25 (April 1, 2024, to March 31, 2025), the original return can be filed by July 31, 2025, and a belated return by December 31, 2025. If both deadlines are missed, the taxpayer can still file an updated return anytime between January 1, 2026, and March 31, 2030, giving a full 48-month window for corrections.
Important Precautions
While the extended window is a welcome relief, it comes with restrictions:
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Updated returns cannot be filed if they result in a loss, reduce the tax liability, or increase a refund.
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The form is strictly for genuine and voluntary disclosure of previously unreported or incorrectly reported income.
Key Amendments in the ITR-U Process
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Extended Filing Window: The time limit to submit an updated return has been increased to 48 months from the end of the relevant assessment year.
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Higher Additional Tax for Delayed Filing:
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If the updated return is filed in the third year, an additional 60% tax on the due amount is applicable.
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Filing in the fourth year attracts an even higher 70% additional tax.
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Restrictions Post-Notices: Taxpayers cannot file ITR-U if a show-cause notice under Section 148A has been issued after 36 months from the end of the relevant assessment year. However, if such a notice is later invalidated, the return may still be filed within the 48-month period.
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Revised Section 140B: This section now clearly specifies the additional tax liability applicable to late submissions under ITR-U.
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Regulatory Alignment: Rule 12AC has been updated to align with the new provisions and ensure consistency.
Final Word
The updated ITR-U form offers a valuable opportunity for taxpayers to correct past errors or omissions in their tax returns. While it promotes better compliance, it comes with strict eligibility criteria and hefty additional tax liabilities for delayed submissions. Taxpayers should evaluate their cases carefully and consult with professionals if needed, to make the most of this extended window while staying within legal and regulatory boundaries.
