An updated return can be filed at any time, but it must be submitted within two years from the conclusion of the relevant assessment year; the provision for this was introduced by the Finance Ministry in the Finance Act 2022.
Tax return filing: Taxpayers alert! Those who are looking to update their income tax returns for the previous two years (2021-22 (FY22) and 2022-23 (FY23)) can do so now until March 31. This deadline will allow them to correct any mistakes or omissions.
An updated return can be filed at any time, but it must be submitted within two years from the conclusion of the relevant assessment year; the provision for this was introduced by the Finance Ministry in the Finance Act 2022.
This also allows taxpayers to correct any mistakes or omissions in their returns However, this update comes with the condition of paying additional tax.
What is the purpose of filing an updated return?
The aim behind introducing the provision for filing an updated return was to reduce litigation and promote voluntary compliance.
To mitigate legal proceedings which can occur if tax evasion is detected, this allows the taxpayer to avoid such situations by filing an updated return.
In Budget 2025, the timeframe for filing an updated return was extended to 48 months.
Here’s who can and those who cannot file an updated return?
Taxpayers who have already filed their original return but need to correct errors can file an updated return. Similarly, those who missed filing their return for the relevant assessment years can also utilize this facility. However, an ITR-U cannot be filed if:
It results in a reduced tax liability or an increased refund claim.
The tax department has already started an assessment or investigation against the taxpayer.
The return contains undisclosed income from illegal sources.
Do you need to pay anything for filing an updated return?
Filing an updated return comes with a cost. Taxpayers are required to pay an additional tax, along with interest and penalties. The additional tax is calculated as follows:
25% of the tax due if the updated return is filed within 12 months from the end of the relevant assessment year.
50% of the tax due if filed after 12 months but before 24 months.
