Taxpayers now have the option to file updated returns (ITR-U) to correct past omissions or errors in their tax filings.
The deadline to do this for Assessment Year 2021-22 (FY 2020-21) is March 31, 2026.
Filing an updated return helps avoid scrutiny, penalties, or prosecution if undisclosed income is later detected.
You must pay the due tax along with interest and additional tax.
The longer you delay, the higher the extra tax:
Within 12 months: 25% of tax and interest
Within 24 months: 50%
Within 36 months: 60%
Within 48 months: 70%
Acting before the deadline is crucial to avoid higher charges, says Sandeep Sehgal, partner, AKM Global.
Who Can and Cannot File an Updated Return
Who can file:
Anyone who made an error or omission in a previously filed return
Those who filed original, belated, or revised returns but later discovered unreported income
Taxpayers who missed filing entirely
Cases of under-declaration, wrong income head, incorrect tax rate, or adjustments to carried forward losses or credits under Sections 115JB or 115JC
Limit: Only one updated return per assessment year is allowed.
Who cannot file:
You cannot use ITR-U to file a nil or loss return, claim a refund, or reduce tax liability
Returns cannot be filed if enforcement actions (like search, survey, or requisition of documents) have started
Assessment, reassessment, revision, or recomputation proceedings that are pending or completed cannot use this facility
The key point: Updated returns are meant only to pay additional tax, not to reduce your liability.
Recent Amendments in the Budget
From April 1, 2026, the scope of updated returns has been expanded:
Now, you can reduce losses claimed in the original return
It also applies when filing in response to a reassessment notice
In such cases, an additional 10% of aggregate tax and interest must be paid over existing additional tax.
Declared income in these returns will not attract penalties, as long as the enhanced additional tax is paid.
This new provision makes it easier for taxpayers to voluntarily correct mistakes without fearing penalties.
