Thanks to Budget 2025 reforms, taxpayers now have an extended window and more flexibility to correct or update Income Tax Returns (ITR). Here’s what you need to know:
1. đź•’ What Changed in Budget 2025?
The time limit to file an Updated Income Tax Return (ITR-U) has increased from 24 to 48 months (i.e. four years) from the end of the relevant assessment year.
This extension allows taxpayers to voluntarily correct incomplete or inaccurate returns long after the original deadlines.
2. 🧾 ITR-U vs Revised Return vs Belated Return
| Return Type | What It Is | Deadline |
|---|---|---|
| Belated Return (139(4)) | For missed original filing | By December 31 of the AY |
| Revised Return (139(5)) | For correcting filed returns | By December 31 or before assessment |
| ITR-U (139(8A)) | For voluntary updates after deadline | Within 48 months of AY end |
3. ✍️ Who Can Use ITR-U?
Almost any taxpayer can file ITR-U if:
- You missed filing originally.
- You filed a return but later found it omitted income or included errors.
- You wish to correct mistakes after filing.
Restrictions apply if:
- You already filed an ITR-U for that AY.
- It would reduce your tax due or increase a refund.
- Your case is under survey or search proceedings.
- An assessment is pending or ongoing under Section 143/148A.
4. ⚠️ Penalties Based on Filing Delay
Filing ITR-U comes with incremental penalties depending on how late you file:
- Within 1st year after AY end: 25% of additional tax and interest
- Between 24–36 months: 60%
- Between 36–48 months: 70%
The sooner you file, the less penalty you pay, making early correction financially wiser.
5. 🧠When Can You File ITR-U?
Example for FY 2024–25 (AY 2025–26):
- Original return deadline: July 31, 2025
- Belated/revised deadline: December 31, 2025
- ITR-U filing window: January 1, 2026 to March 31, 2029
6. âś… Step-by-Step to File ITR-U
- Log into the Income Tax portal and choose ITR-U for the relevant Assessment Year.
- Reference your original or revised return (if filed earlier).
- Fill in the updated figures: income, deductions, credits, etc.
- Pay the applicable tax, interest, and additional fee.
- Submit and e-verify the return.
7. 🧩 When ITR-U Is a Wise Choice
- You missed income (like freelance payments, rental income, FD interest).
- You forgot deductions (under 80C, 80D, etc.).
- You made clerical errors (wrong bank account, TDS mismatch).
- You discovered taxable income after the due date.
8. 🛑 When You Can’t Use ITR-U
- You’ve already filed an ITR-U for the same year.
- The updated return will result in a lower tax liability or higher refund.
- The return is under scrutiny, assessment, or part of a tax investigation.
- The case involves survey or search proceedings.
✔️ Key Takeaways
- The ITR-U allows a 4-year correction window for past returns.
- Use it to correct mistakes, omissions, or missed filings.
- File as early as possible to avoid higher penalties.
- Track your assessment status to ensure eligibility for ITR-U.
