March 31 is deadline for updated ITR: Have unreported income, applied wrong rate of tax? File ITR-U with payment of additional tax, else be ready to pay higher penalties

Individuals who have missed to report any income or have miscalculated their income resulting in lower income tax liability have another opportunity to fix this mistake by filing an updated Income Tax Return (ITR-U). However, do note, you need to pay additional income tax as penalty plus interest for filing ITR-U and no tax refund claims can be filed through ITR-U. While earlier ITR-U could have been filed to correct mistakes for the past two years. In Budget 2025, it was increased to cover the last four years.

If you have any unreported income or made any errors in previously filed income tax return (ITR), then it is prudent that you pay the additional tax now and file ITR-U. This is because if you don't file ITR-U now and later the income tax department catches you, a larger penalty can be imposed than what you pay now to file ITR-U.

Additional Tax Payable for filing ITR-U:

• Within 12 months- 25%
• Within 24 months- 50%
• Within 36 months- 60%
• Within 48 months- 70%

Deadline to file ITR-U

The time limit to file an updated income tax return under Section 139 (8A) is extended to four years from two years starting April 2025 (as announced in budget 2025) from the end of the relevant assessment year. Hence, the updated income tax return of FY 2020-21 (AY 2021-22) can be filed till March 31, 2026.

FY 2020-21 (AY 2021-22)	31 March 2026
FY 2021-22 (AY 2022-23)	31 March 2027
FY 2022-23 (AY 2023-24)	31 March 2028
FY 2023-24 (AY 2024-25)	31 March 2029
FY 24-25 (AY 2025-26)	31 March 2030

Source: Tax2Win

For what purposes ITR-U can be filed?

Chartered Accountant Abhishek Soni, co-founder, Tax2Win says that Individuals, Hindu Undivided Family (HUF), Firms, Companies can file ITR-U if they are done either of these or all of these:

• ITR previously not filed
• Income not reported correctly
• Wrong heads of income chosen
• Reduction of carried forward loss
• Reduction of unabsorbed depreciation
• Reduction of tax credit under Section 115JB/115JC
• Wrong rate of tax

Who cannot file ITR-U?

Soni says that ITR cannot be filed in the following situations:

• If an updated income tax return is already filed
• If an updated income tax return is the return of loss
• If an updated income tax return reduces Income Tax Liability in the return filed earlier
• If the updated income tax return results in an increase of Refund
• If a search has been initiated under Section 132
• If books of Accounts or any other documents are called for by the Income Tax Department under section 132A.
• If the survey has been conducted under section 133A
• If any proceeding of assessment, reassessment, re-computation, or revision is pending or completed for that relevant year
• If the Assessing Officer has information against such person under the Prevention of Money Laundering Act or Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act or Benami Property Transactions Act or Smugglers and Foreign Exchange Manipulators Act and the same has been communicated to the assessee.
• If the information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him prior to the date of furnishing of return under this subsection.
• Other Notified Persons