Updated Return (ITR-U): Additional Tax and Time Limit under the Income Tax Act 2025

An updated return (often called ITR-U) lets you report income you missed, even after the normal and revised return windows have closed. Under the Income Tax Act 2025 you can file it within 48 months from the end of the financial year that follows the tax year (section 263(6)). You pay the tax and interest due plus additional income-tax of 25%, 50%, 60% or 70% of that amount, depending on how late you are (section 267(5)). Law below is as amended by the Finance Act 2026, effective 1 April 2026.

What is an updated return under the Income Tax Act 2025?

It is a return you file voluntarily for a tax year under section 263(6). It works whether or not you filed an original return (section 263(1)), a belated return (263(4)) or a revised return (263(5)). Its purpose is to pay more tax on income that was left out, not to reduce your liability or claim a refund.

Two more points to know before reading on:

• Tax, interest and the additional tax must be paid before you file, and the return must carry proof of that payment (section 267(1)(c) and 267(3)(c)).
• "Tax" for the additional-tax calculation includes surcharge and cess (section 267(6)).

What is the time limit for filing an updated return?

The limit is 48 months from the end of the financial year succeeding the relevant tax year (section 263(6)(a)). Take tax year 2026-27. The succeeding financial year is 2027-28, which ends on 31 March 2028. Forty-eight months from there is 31 March 2032.

The additional tax rate climbs in 12-month steps measured from the same 31 March 2028 date.

How much additional tax do you pay on an updated return?

When the updated return is filed	Additional income-tax
After the time under section 263(4) or (5) expires, and before 12 months from the end of the succeeding financial year	25% of tax plus interest
After 12 months, before 24 months	50%
After 24 months, before 36 months	60%
After 36 months, before 48 months	70%
Filed in response to a notice under section 280, within the period in the notice	Rate above, plus a further 10% of tax plus interest

The base for the percentage is the aggregate of tax and interest payable (section 267(5)(i)). The notice add-on is in section 267(5)(ii). Interest is the interest chargeable under the Act on the income in the updated return, reduced by interest already paid on the earlier return (section 267(10)(c)); where there was no earlier return, the interest already paid is nil (section 267(11)).

How is the tax payable worked out if you never filed a return?

Section 267(1) covers a person who filed no return at all. The tax payable is worked out on the updated return after crediting only:

• advance tax already paid;
• tax deducted or collected at source;
• relief under section 157;
• foreign tax relief under section 159(1), 159(2) or 160;
• certain tax credits under section 206 (section 267(2)).

On top of that tax you also pay interest and the fee for the delay in filing and any default in advance tax (section 267(1)(a)).

What if you already filed a return and missed some income?

Section 267(3) applies. Tax is worked out after credit for what was already claimed in the earlier return, plus TDS, foreign tax relief and tax credits on the newly added income (section 267(4)). The amount of any refund already issued on the earlier return is added back. The additional tax is then reduced by the interest you already paid on the earlier return (section 267(3)(b)).

Worked example 1: no earlier return, filed in year 1

Assumptions. Tax year 2026-27. Meena earned freelance income and did not file a return. After TDS, tax payable (including surcharge and cess) is Rs 80,000. Interest chargeable is Rs 20,000. She files on 15 January 2029, which is after the time under section 263(4) and (5) and before 31 March 2029.

Step	Amount (Rs)
Tax payable after credits	80,000
Interest payable	20,000
Tax plus interest	1,00,000
Additional tax at 25% of 1,00,000	25,000
Total to pay before filing (plus any fee for delay, section 267(1)(a))	1,25,000

Worked example 2: earlier return filed, filed in year 2

Assumptions. Tax year 2026-27. Ravi filed his return on time and later found Rs 5,00,000 of income he left out. Tax on that income is Rs 1,50,000 (including surcharge and cess), no TDS on it. Interest on it is Rs 30,000. He files the updated return on 10 October 2029, after 31 March 2029 and before 31 March 2030, so the 50% band applies. He paid no interest in the earlier return.

Step	Amount (Rs)
Tax payable on the missed income	1,50,000
Interest payable	30,000
Tax plus interest	1,80,000
Additional tax at 50% of 1,80,000	90,000
Less interest already paid on earlier return	0
Total to pay before filing	2,70,000

Had Ravi filed in year 1 instead, the same tax and interest would have attracted 25%, which is Rs 45,000 instead of Rs 90,000. Waiting cost him Rs 45,000 more.

Worked example 3: updated return after a notice

Assumptions. Tax year 2026-27. The Assessing Officer issues a notice under section 280 on information that income escaped assessment. Sunita files an updated return within the period given in the notice, in year 1. Tax plus interest comes to Rs 2,00,000.

Step	Amount (Rs)
Year 1 band, 25% of 2,00,000	50,000
Further 10% for filing in response to a notice	20,000
Additional tax	70,000
Total with tax and interest	2,70,000

The notice period must be at least 30 days from the notice date and cannot exceed three months from the end of the month of issue (section 280(1)(c)). A return filed after that period is not treated as a return under section 263 (section 280(3)). Where you file in response to a notice, you cannot respond in any other manner (section 263(6)(b)(ii)).

Who cannot file an updated return?

Section 263(6)(c) bars an updated return for a tax year where any of these applies:

• it is a return of loss (except where you already filed a loss return on time and the updated return shows income or a smaller loss);
• it reduces total tax liability;
• it creates a refund, or increases a refund;
• an updated return was already filed for that year;
• assessment, reassessment, recomputation or revision proceedings are pending or complete for that year (except a return filed on a section 280 notice);
• the Assessing Officer holds information on violation of specified laws and has communicated it to you;
• information under a tax treaty or section 159 has been communicated to you;
• prosecution proceedings under Chapter XXII have been started;
• 36 months have passed and a show-cause notice under section 281 has been issued (unless an order under section 281(3) found it unfit for a section 280 notice);
• you belong to a class notified by the Board.

Section 263(6)(d) also bars it after a search (section 247), requisition (section 248), survey (section 253, other than sub-section (4)) or a notice under section 294, for the tax year concerned and all earlier tax years.

If the updated return reduces a carried-forward loss, unabsorbed depreciation or tax credit for later years, you must file an updated return for each of those later years too (section 263(6)(e)).

Real-life scenarios

Meena forgot a client. Meena, a designer, reports her salary but forgets a client who paid her without TDS. She finds it 18 months after the succeeding financial year ends. She works out tax and interest, adds 50%, pays it, and files the updated return with proof of payment.

Ravi, a refund seeker, is turned away. Ravi filed a return and later realises he forgot a deduction. An updated return that reduces his liability or raises his refund is barred by section 263(6)(c). The updated return is for adding income, not for correcting claims in his favour.

Which form and how do you file an updated return?

Under rule 165(1) of the Income-tax Rules 2026, an updated return is furnished in Form ITR-UN (the form many people still call ITR-U), verified as the form indicates. Rule 165(2) sets the manner:

• a company files electronically under digital signature;
• a person whose accounts must be audited under section 63 files under digital signature, or transmits the data electronically and verifies with an electronic verification code;
• anyone else may use digital signature, an electronic verification code, or transmit the data and then submit the verification in Form ITR-V.

If the updated return includes foreign income on which foreign tax credit is claimed, the Form 44 statement and certificate for that income are due on or before the date you file the updated return (rule 76(13)).

Common mistakes

• Filing before paying. The tax, interest and additional tax must be paid first, and the return must carry proof (section 267(1)(c)). Missing payment details can also make the return defective (rule 166(1)(c)).
• Computing the percentage on tax alone. The base is tax plus interest, and tax includes surcharge and cess.
• Using the wrong band. Count months from the end of the financial year after the tax year, not from the tax year end.
• Ignoring later years. If a carried-forward loss or credit shrinks, each later year needs its own updated return.
• Missing the notice effect. A return filed in response to a section 280 notice carries the extra 10%.

Quick reference

Item	Rule	Where
Time limit	48 months from end of the succeeding financial year	263(6)(a)
Additional tax	25% / 50% / 60% / 70% of tax plus interest	267(5)(i)
Notice surcharge	Further 10%	267(5)(ii)
Notice response period	30 days to 3 months from end of month of notice	280(1)(c)
Payment	Before filing, with proof	267(1)(c), 267(3)(c)
Defective return test	Tax payment details not filled	Rule 166(1)(c)

Where this is in the Act

• Section 263(6): who may file, time limit, bars on filing.
• Section 267: tax on an updated return, credits, additional income-tax, interest.
• Section 280: notice where income has escaped assessment.
• Rule 165: Form ITR-UN and how it is furnished.
• Rule 166(1)(c): payment details as a defective-return condition.

This article is general information, not tax advice.

If you handle many clients, Finexo's practice management software helps you keep track of filing windows and client follow-ups. For a related topic, see filing a return to carry forward losses.