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The Union Budget 2025 extended the deadline for filing updated income tax returns (ITR-U) from 2 years to 4 years after the relevant assessment year.
Introduced in Budget 2022 under Section 139(8A) of the Income Tax Act, ITR-U allows taxpayers to voluntarily update their income tax returns within a specified window by paying the applicable tax, interest, and an additional fee.
In a major relief to taxpayers, the Union Budget 2025 extended the deadline for filing updated income tax returns (ITR-U) from 2 years to 4 years after the end of the relevant assessment year. This means that if you need to correct past filings from up to four years ago, you now have a fresh chance, although with a cost.
What Is ITR-U?
Introduced in Budget 2022 under Section 139(8A) of the Income Tax Act, ITR-U allows taxpayers to voluntarily update their income tax returns within a specified window by paying the applicable tax, interest, and an additional fee. It was designed to promote compliance and reduce litigation by allowing individuals and businesses to come clean without facing prosecution or heavy scrutiny.
Before Budget 2025, this window was limited to 24 months (2 years) from the end of the assessment year.
But, starting April 1, 2025, (after the Budget 2025 announcement), the window has been doubled to 48 months (4 years).
Can You File Missed ITRs For Past 4 Years?
Rajarshi Dasgupta, executive director (tax) of AQUILAW, said, “While the income tax provisions allow for filing of a belated return u/s 139(4)/ revised return u/s 139(5) even after the due date for filing of returns, the said returns can be filed only for the previous year (PY) until December 31 of the assessment year (AY). However, an updated return (ITR-U) can be filed u/s 139(8A) up to a period of 4 years from the end of relevant assessment year.”
For example, for PY 2020-21, the AY ended on March 31, 2022. A taxpayer may file an updated return until March 31, 2026, for PY 2020-21 using this kind of return.
Dasgupta, however, said there are certain riders associated with the same which should be kept in mind while filing an updated return.
Riders For Filing Belated/ Updated ITRs
Tax liability stands increased: 25% of the tax declared (or additional tax) needs to be paid if ITR-U is filed within 12 months of the end of assessment year. Similarly, 50% of additional tax, 60% of additional tax and 70% of the additional tax needs to be paid for filing ITR-U within 24 months, 36 months (inserted through Budget 2025) and 48 months (inserted through Budget 2025) of the end of assessment year, respectively.
• Interest shall be leviable on the total tax liability including the additional tax as above
• Updated return can be filed only once for a particular year
• ITR-U cannot be filed to claim losses or reduction in tax liability or increase in refund
• ITR-U also cannot be filed in case the assessment has been completed or is currently underway or for survey and inspection related cases.
What To Do If You Missed ITR For 2023-24?
The taxpayer can file a belated return till December 31 along with a penalty of Rs 5,000 and applicable interest. The penalty shall ne Rs 1,000 if the taxable income is less than Rs 5 lakh and no penalty shall be imposed is taxable income is less than Rs 2.5 lakh.
In case the deadline of 31st December is also missed, the taxpayer can file ITR-U. Supposedly, the tax liability is Rs 1 lakh. To file an ITR-U, the person shall pay taxes as follows:
Normal due date: July 31, 2024.
Due date for belated and revised return: December 31, 2024.
Checklist for Filing ITR-U Under 4-Year Window
1. Identify eligible financial years for which you missed or underreported returns.
2. Calculate tax dues, interest, and additional penalty based on delay period.
3. Download and fill ITR-U form along with applicable ITR form (e.g., ITR-1, ITR-4).
4. Disclose reason: e.g., income not reported earlier, wrong head of income, etc.
5. File online via the Income Tax e-filing portal.
6. Pay tax dues and additional amount before submitting the return.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso… Read More
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