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Income Tax Update: ITR-U Filing Deadline Extended to 48 Months
The Indian government has extended the deadline for filing updated income tax returns (ITR-U) from 24 months to 48 months. This change, proposed in Budget 2025 by Finance Minister Nirmala Sitharaman, allows taxpayers more time to rectify errors, disclose omitted income, and comply with tax regulations.
Understanding ITR-U and Section 139(8A)
Introduced in 2022, the updated return facility under Section 139(8A) of the Income Tax Act, 1961, enables taxpayers to correct inaccuracies in previously filed returns or file a return if they had missed doing so. It applies in cases where income was omitted, losses or refunds were misrepresented, or the required threshold for filing a return was exceeded but no return was submitted.
With nearly 90 lakh taxpayers voluntarily updating their income and paying additional taxes since its introduction, the government has now expanded the timeframe to encourage further compliance.
Key Highlights of the Extended ITR-U Filing Timeline
Time Limit Extended: The window for filing an updated return has been extended from 24 months to 48 months from the end of the relevant assessment year.
Additional Tax Payable: Taxpayers filing an updated return must pay an additional tax, which increases over time:
Within 12 months: 25% of the total tax and interest due.
Within 24 months: 50% of the total tax and interest due.
Within 36 months: 60% of the total tax and interest due.
Within 48 months: 70% of the total tax and interest due.
Example: For the financial year 2023-24, the updated return can now be filed until March 31, 2029, instead of March 31, 2027.
How to File ITR-U
To file an updated return, follow these steps:
Download Form ITR-U from the Income Tax Department’s website.
Log in to the e-filing portal and select “Updated Return (ITR-U).”
Enter the necessary details, including additional income and tax payable.
Calculate and pay any applicable additional tax.
Submit the form and verify the return using Aadhaar OTP, net banking, or DSC.
Restrictions on Filing ITR-U
Certain taxpayers are not eligible to file ITR-U, including those who:
Have already filed a revised return.
Intend to report a loss or zero income.
Seek to modify a previously claimed refund.
Aim to reduce their tax liability.
Are under investigation or assessment under Sections 132, 133A, or 132A.
Have no additional tax liability due to TDS or losses.
Impact on Taxpayers
Certain taxpayers are not eligible to file ITR-U, including those who:
Have already filed a revised return.
Intend to report a loss or zero income.
Seek to modify a previously claimed refund.
Aim to reduce their tax liability.
Are under investigation or assessment under Sections 132, 133A, or 132A.
Have no additional tax liability due to TDS or losses.
While this extension promotes voluntary compliance, the steep additional tax—ranging from 25% to 70%—may pose a significant financial burden. Many experts believe that a uniform 25% additional tax would have been sufficient as a deterrent while still encouraging timely compliance.
Nonetheless, this amendment provides a crucial opportunity for taxpayers to rectify past errors and adhere to tax laws without severe penalties. Staying informed about these changes and ensuring accurate tax filing will help individuals and businesses maintain compliance with evolving tax regulations.
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