“Missing updated entirely risks notices under section 147/148, best-of-judgment assessments, or penalties up to 200 percent of tax evaded,” an tax expert said.
If you have missed reporting any income or made an error in your Income Tax Return (ITR), there’s still an opportunity to set it right. Taxpayers can file an Updated Income Tax Return (ITR-U) to correct mistakes or disclose previously unreported income. With the March 31 deadline nearing, acting promptly can help avoid higher penalties and potential legal complications.
Any taxpayer, whether or not he has furnished a return earlier, may furnish an Updated Return of income within 48 months from the end of the relevant assessment year. For AY 2021-22, the updated return can be filed up to 31st March 2026. For AY 2025–26, the deadline will be March 31, 2030. However, March 31 each year is important, as additional tax liability increases with delay.
What is ITR-U?
The Updated Income Tax Return (ITR-U) is a provision under Section 139(8A) of the Income Tax Act that allows taxpayers to correct mistakes, disclose previously unreported income, or update an already filed return.
It can be filed even if you missed the original due date, the belated return deadline, or the chance to revise your return. Simply put, ITR-U offers taxpayers an opportunity to voluntarily rectify their tax filings and stay compliant.
Budget 2026: What’s new for ITR-U
The government has introduced a key change in Budget 2026 aimed at simplifying tax compliance:
ITR-U allowed during reassessment: Taxpayers can now file an updated return even after reassessment proceedings have started. However, this will attract an additional 10 percent tax over and above the existing penalties.
Loss set-off now permitted: Taxpayers can now adjust losses while filing ITR-U, offering greater flexibility in tax calculations.
Is there any penalty for missing ITR U?
Unlike a revised return, which is used to fix genuine errors, ITR-U is meant for situations where income was not reported—whether deliberately or by oversight. “ITR-U is not a mandatory return and does not entail a penalty for missing to file. In fact, ITR-U is an option given to taxpayer to come clean on pending or missed tax payments by discharging the taxes due alongwith additional tax as applicable and interest,” said Joint Secretary, Bombay Chartered Accountants’ Society.
Additional Tax is payable over and above the regular tax payable under Updated Return depending on the period within which ITR-U is filed.
Within 12 months from end of AY: 25 percent of additional tax + interest.
Between 12–24 months from end of AY: 50 percent of additional tax + interest.
Between 24–36 months from end of AY (if applicable): 60 percent of additional tax + interest.
Between 36–48 months from end of AY (if applicable): 70 percent of additional tax + interest.
