Key Points:
- December 31, 2025 was the final deadline for both regular and belated ITR filing
- Approximately 70 lakh taxpayers have not filed their returns for assessment year 2025
- Only remaining option is to file updated return (ITR-U) under Section 139(8A)
- ITR-U can be filed up to 48 months after the end of the assessment year
- Penalties range from 25% additional tax in the first year to 70% in the fourth year
The deadline for filing Income Tax Returns (ITR) for the assessment year 2025 has now officially passed, closing the window for millions of taxpayers who failed to meet their statutory obligation by December 31, 2025. According to reports from tax authorities, approximately 70 lakh individuals have still not filed their returns, leaving them with limited and expensive alternatives to comply with tax laws.
Belated Return Option Also Closed
It is important to note that the option to file a belated return is also no longer available for those who missed the original deadline. The last date for filing belated returns under Section 139(4) of the Income Tax Act was also December 31, 2025, coinciding with the regular filing deadline. This means taxpayers cannot simply file a delayed return with a nominal late fee anymore.
For those who did file belated returns before the deadline, the late fee structure ranged from Rs. 1,000 to Rs. 5,000 depending on income levels. Taxpayers with a total income below Rs. 5 lakh were required to pay Rs. 1,000, while those with higher incomes faced steeper penalties. Additionally, interest was charged on any outstanding tax liability under Sections 234A, 234B, and 234C of the Income Tax Act.
Updated Return (ITR-U): The Only Remaining Option
With both the regular and belated filing deadlines now expired, the approximately 70 lakh non-compliant taxpayers have only one option left, filing an updated return under Section 139(8A), commonly known as ITR-U. This provision allows taxpayers to file returns up to 48 months after the end of the relevant assessment year, providing a longer window for compliance but at a significantly higher cost.
The updated return mechanism was introduced to provide taxpayers with an opportunity to correct omissions or errors in their original filings. However, for those who have not filed any return at all, it serves as the final opportunity to come clean with the tax authorities. The process involves disclosing all income sources, claiming eligible deductions, and paying the tax due, along with substantial penalties.
Heavy Penalty Structure for Updated Returns
The penalty for filing an updated return is considerably steeper than that for belated returns. According to the rules, taxpayers must pay additional tax over and above their normal tax liability. The penalty structure is time-dependent, becoming more punitive with each passing year.
In the first year after the assessment year, an additional tax of 25% is levied on the tax due. This increases to 50% in the second year, 60% in the third year, and 70% in the fourth year. For the assessment year 2025, taxpayers filing in 2026 would face a 25% additional tax, which would rise to 50% if filed in 2027, and so on. This progressive penalty structure is designed to encourage early compliance while penalizing prolonged delays.
What Happens If You Don’t File at All?
Taxpayers who choose not to file any return, even the updated one, face severe consequences. The Income Tax Department can initiate prosecution proceedings under Section 276CC, which may result in rigorous imprisonment for a term ranging from three months to seven years, along with a fine. Additionally, the department can issue notices under Section 148 for income escaping assessment and determine tax liability ex-parte, leading to higher tax demands, penalties, and interest.
How to File ITR-U
Taxpayers wishing to file updated returns must visit the official e-filing portal of the Income Tax Department at incometax.gov.in. The process requires selecting the relevant ITR form, choosing the ‘Updated Return’ option, and providing a valid reason for the delay. The system will automatically calculate the additional tax liability based on the delay period. For more detailed information and step-by-step guidance, taxpayers can visit the official website or consult with tax professionals to ensure proper compliance and avoid further penalties.
