Union Budget 2025 has proposed to extend updated return filing period to 48 months; understand the rules, benefits, and restrictions for revised, belated, and updated ITR filings.
Missed filing your income tax returns? Union Budget 2025 has proposed to allow such taxpayers to file their returns and rectify errors, if any, for up to four years.
The limit for filing updated returns has been extended from 24 months to 48 months from the end of the relevant assessment year. Taxpayers will benefit from this move by voluntarily correcting mistakes or omissions on their original or belated returns. But what exactly are updated returns, and how do they differ from revised and belated returns?
Here are details of these three types of returns and explore the implications of the proposed changes to the updated returns filing process.
Revised returns
If you’ve already filed your tax return but later discovered errors, omissions, or incorrect statements, you can revise the return within the specified timeframe.
“This return can be filed three months before the end of the relevant assessment year,” said Rahul Charkha, Partner, Economic Laws Practice. This means that for the AY 2025-26, the deadline was December 31, 2025, as the assessment year ends on March 31, 2026.
For instance, if Mr ABC filed his original income tax return by July 31, 2025, and later realised that he forgot to include interest income or claim a deduction he was eligible for, then he can file the revised income tax return to correct these mistakes by December 31, 2025.
Before filing the revised return, a taxpayer must ensure that the original return has been verified. No additional fee is payable when the original return is being revised. “But, revising your tax return can have interest implications if it leads to an increased tax liability,” cautioned Rajarshi Dasgupta, Executive Director – Tax, AQUILAW. However, it’s worth noting that you can file a revised return as many times as needed.
Belated returns
For an individual taxpayer, the due date for filing income tax return is July 31 of the subsequent year. So, the due date for filing income tax returns for the financial year 2024-25 is July 31, 2025 (which falls in assessment year 2025-26).
“However, those who have missed such a deadline can file a belated return under section 139(4) up to December 31 of the assessment year or before completion of assessment whichever is earlier,” said Dasgupta. So, any return filed after July 31, 2025, but before December 31, 2025, for AY 2025-26 will be considered a belated return.
To file a belated return, you may need to pay interest at one percent of the unpaid tax till the date of filing and a penalty. “As per section 234F, late filing fees of Rs 5,000 need to be paid if a return is furnished after the due date. However, the amount of late filing fees to be paid shall be Rs 1,000 if the total income of the person does not exceed Rs 5 lakh,” said Abbas Jaorawala, Senior Director and Head – Direct Tax, Khaitan Legal Associates.
No late filing fee will be imposed if you voluntarily file your income tax return, even after the deadline, provided you’re not obligated to file a return. For example, under the old tax regime for FY 2024-25, individuals with income below the basic exemption limits – Rs 2.5 lakh (below 60 years), Rs 3 lakh (60-80 years), and Rs 5 lakh (above 80 years) are not required to file an income tax return.
“The belated return filed can also be revised by the assessee,” said Charkha.
Dasgupta pointed out that one significant drawback of filing belated returns is that such taxpayers will not be allowed to carry forward capital losses.
Updated returns
The updated return facility, launched in 2022, allows taxpayers to voluntarily correct any mistakes or omissions in the original or belated return. “This initiative promotes transparency and compliance, and its impact is evident: nearly 90 lakh taxpayers have already utilised this facility to update their incomes and pay additional taxes,” said Finance Minister Nirmala Sitharaman in her Budget 2025 speech.
An updated return can only be submitted after the deadline for filing the original, revised, or belated return has elapsed. Jaorawala said, “The purpose of filing an updated return is to declare additional income and pay the resulting additional tax. Notably, an updated return cannot be revised once filed.”
Additionally, Charkha pointed out certain restrictions on filing updated returns. “For instance, you cannot file an updated return to claim a loss or to increase a refund. Furthermore, filing an updated return should not result in reduction of your tax liability.”
If a taxpayer misses the December 31 deadline, he can file an updated return (ITR-U) under S 139(8A) up to a period of two years from the end of the relevant assessment year. This time period of two years has now been extended to four years through Budget 2025.
Additional tax on updated returns
The extension for filing updated returns comes with certain conditions. When availing of this facility, you’ll need to pay a percentage of the additional tax declared, which varies depending on the timeframe. Specifically, if you file an updated return within 12 months of the assessment year end, you’ll need to pay 25 percent of the additional tax. This percentage increases to 50 percent if filed within 24 months, 60 percent within 36 months, and 70 percent within 48 months of the assessment year end.
The steep additional tax ranging from 25 percent to 70 percent of the tax and interest payable significantly increases the overall tax burden on taxpayers. “While the extended window for filing updated returns encourages compliance, a uniform additional tax of 30-50 percent would have been sufficient as a deterrent without being excessively punitive,” said Charkha.
“Additionally, interest will also be levied. Notably, an updated return can only be filed once,” cautioned Dasgupta.
Caveats in extending updated returns to 48 months
Filing an updated return within the extended 48-month window has certain limitations. According to Charkha, “If the income tax department has issued a show-cause notice for reassessment proceedings, you cannot file an updated return within 36 months of the end of the relevant assessment year.”
However, if the reassessment proceeding is later deemed unwarranted, the taxpayer can still file an updated return, albeit after the 36-month mark, as long as it is within the 48-month limit. This provision safeguards taxpayers from unfairly missing out on the extended timeframe in cases where reassessment proceedings are not ultimately pursued.
Source: www.moneycontrol.com
