Key Points:
- The last date to file an updated Income Tax Return (ITR-U) for FY 2024-25 is March 31, 2025.
- Filing before the deadline incurs a 25% additional tax plus interest; filing after March 31 increases this to 50%.
- ITR-U allows taxpayers to disclose unreported income and correct errors in previously filed returns.
- From April 1, taxpayers will have up to 48 months to file revised returns under the new rule proposed in Budget 2025.
New Delhi: The Income Tax Department has issued an advisory urging taxpayers to file their updated Income Tax Returns (ITR-U) before the March 31, 2025 deadline to avoid higher penalties and additional tax burdens. This facility, introduced in the Union Budget 2022, enables taxpayers to disclose undeclared income or rectify mistakes in earlier filings within two years of the relevant assessment year.
Benefits of Filing Updated ITR Before Deadline
Taxpayers filing ITR-U by March 31 will incur a lower penalty of 25% additional tax plus interest. However, those who miss the deadline will face a steeper penalty of 50% additional tax plus interest. The Income Tax Department emphasized on social media platform X: “File ITR-U now = 25% additional tax + interest. File after March 31 = 50% additional tax + interest.”
This initiative promotes voluntary compliance while reducing litigation by allowing taxpayers to correct errors or omissions in their original returns.
Updated ITR Filing Statistics
Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha that as of February 28, 2025, a total of 4.64 lakh updated ITRs were filed for FY 2024-25, contributing ₹431.20 crore in taxes. In comparison, during FY 2023-24, over 29.79 lakh updated returns were filed, generating ₹2,947 crore in additional taxes.
Key Features of ITR-U
The updated return form (ITR-U) allows individuals, businesses, and other entities (except for certain special cases) to:
- Rectify errors such as unreported income or incorrect deductions.
- Recalculate taxable income and adjust carried-forward losses or unabsorbed depreciation.
- Provide reasons for updating returns, including missed filings or incorrect reporting.
Taxpayers must pay additional taxes based on the timing of their filing:
- Before March 31: Additional tax at 25%.
- After March 31: Additional tax at 50%.
New Rules Effective April 1
Starting April 1, as announced in Budget 2025, the period for filing updated returns will be extended from two years to four years (48 months). While this offers taxpayers more time to comply voluntarily, it also imposes higher penalties for delayed filings beyond the initial two-year window.
How to File ITR-U
Taxpayers can file ITR-U online via the official e-filing portal by:
- Logging into their account using PAN credentials.
- Selecting “Updated Return under Section 139(8A)” from the filing options.
- Providing reasons for updating income and recalculating tax liabilities.
- Paying applicable taxes and verifying the return using Aadhaar OTP or Digital Signature Certificate (DSC).
Why Timely Filing Matters
Failing to file an updated return may result in legal consequences such as income tax notices, penalties, and even imprisonment under extreme circumstances. For instance:
- Tax liabilities exceeding ₹25,000 could lead to imprisonment ranging from six months to seven years.
- Lower liabilities could result in imprisonment between three months and two years.
Looking Ahead
With just days left until the March 31 deadline, taxpayers are strongly advised to act promptly to minimize penalties and ensure compliance with tax laws. The upcoming extension of the filing window is expected to simplify compliance further while encouraging transparency in reporting income.
This initiative underscores India’s commitment to fostering a taxpayer-friendly environment while maintaining robust revenue collection mechanisms.
