Last Chance Before March 31: Correct Your Return with ITR-U and Avoid Heavy Penalties

If you have missed reporting any income or made a mistake while filing your Income Tax Return, there is still a chance to correct it. Taxpayers can update their initial returns by filing an updated Income Tax Return (ITR-U). The deadline of March 31 is approaching; hence, any delay may increase the additional tax, and there may be a risk of notice in the future.

What is ITR-U?

ITR-U or an Updated Income Tax Return is a facility given under Section 139(8A) of the Income Tax Act through which a taxpayer can make corrections in his/her originally filed return or can file a new one if the return had never been filed. This option remains available even if you miss the original due date, belated return and revised return deadlines. Any taxpayer can file an updated return within 48 months from the end of the relevant assessment year.

• Last date for AY 2021-22 is 31 March 2026.
• The deadline for AY 2025-26 will be 31 March 2030.
• Every year, 31 March is important because an additional tax is charged for the delay.

What changed in 2026?

Two changes have been made in Budget 2026 to make compliance easier. Even after the initiation of reassessment proceedings, ITR-U can be filed, but an additional 10% tax will be levied on it.  Now, taxpayers can also set off losses while filing ITR-U.

How much additional tax will be charged?
While filing the updated return, additional tax has to be paid in addition to the normal tax, which depends on the delay:

• Within 12 months: 25% additional tax + interest
• 12-24 months: 50% additional tax + interest
• 24-36 months: 60% additional tax + interest
• 36-48 months: 70% additional tax + interest

It is not mandatory to file ITR-U, but if you have not reported and updated your income, you may be liable to a reassessment notice or a penalty of up to 200% on tax evasion. Therefore, it is safer to update the return before March 31.