The Income Tax Department has enabled utilities for filing updated income tax returns (ITR-U) through ITR-1 and ITR-2 forms for assessment years (AY) 2021-22 and 2022-23, in accordance with Finance Act, 2025.The Union Budget 2025 has extended the timeline to 48 months from the assessment year’s end for filing updated returns under Section 139 (8A) of the Income Tax Act. This provision enables taxpayers to correct previous filing errors by paying additional taxes, regardless of whether they submitted returns earlier. Certain conditions and limitations apply regarding eligibility and timing.Read more: ITR-3 enabled for e-filing, covers business and professional income earners, directors, and traders— key things to know before filing for AY 2025–26ITR-U serves as a voluntary compliance mechanism for taxpayers to address errors and omissions, aiming to minimise legal disputes.Taxpayers now have 48 months from the relevant assessment year’s end to submit updated income tax returns, extended from the previous 24-month period.The eligibility criteria for ITR-U submission includes any person filing within 48 months of the relevant assessment year’s end, regardless of previous return submissions. Applicable scenarios include non-filed returns, incorrectly reported income, wrong income categorisation, reduction in unabsorbed depreciation, or tax credit adjustments.ITR-U submissions are not permitted for nil returns, loss returns, cases reducing total tax liability, increasing refund amounts, or instances involving search and seizure operations or ongoing prosecution proceedings.Tax regime selection must occur within the prescribed deadline under section 139 (1) of the Income Tax Act, with no subsequent modifications permitted. The e-filing system restricts ITR-U submissions to once per assessment year, as reported by ET.For AY 2025-26, taxpayers can file ITR-U until March 31, 2030. However, a penalty applies to taxpayers filing an updated return using ITR-U, depending on how promptly the ITR is submitted.According to income tax rules, an additional tax of 25% on the aggregate tax and interest is levied if the updated ITR is filed within twelve months from the end of the assessment year. This increases to a 50% additional tax if the updated return is submitted between twelve and twenty-four months. If the return is filed between twenty-four and thirty-six months, a 60% additional tax becomes payable by the taxpayer. For updated returns filed between thirty-six and forty-eight months, a 70% additional tax is payable.
