“The best way to avoid tax trouble is to correct it before the department does.”
In a landmark move, the Central Board of Direct Taxes (CBDT) has extended the scope of the Updated Return (ITR-U) filing window — now allowing taxpayers to file or revise their income tax returns for up to 4 years from the end of the relevant Assessment Year.
Previously capped at 2 years, this extended compliance timeline is a game-changing opportunity for millions who may have missed the deadline, misreported income, or failed to file altogether. Let’s unpack what this means and how you can benefit.
What is ITR-U?
ITR-U is the Income Tax Return form prescribed under Section 139(8A) of the Income-tax Act, 1961. It allows taxpayers to update their return voluntarily, whether or not an original return was filed, for past Assessment Years — by paying additional tax and interest.
This scheme encourages voluntary compliance, helps avoid scrutiny, penalties, and offers a last chance to correct past tax records.
What’s New in 2024? — Major Update by CBDT
| Feature | Earlier Rule | Now (Post-Notification) |
|---|---|---|
| Time limit to file ITR-U | 2 years from the end of relevant AY | ✅ 4 years from the end of relevant AY |
| Additional tax (within 12 mo) | 25% of additional tax + interest | 🔁 No change |
| Additional tax (12–24 mo) | 50% of additional tax + interest | 🔁 No change |
| Additional tax (3rd/4th year) | ❌ Not available | ✅ Likely 60%–70% (awaiting official confirmation) |
✅ Who Can Use ITR-U?
You can file ITR-U if you fall into any of the following categories:
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😬 You missed filing your return altogether.
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🧾 You filed a return, but forgot to disclose some income (interest, rent, foreign income, etc.).
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💼 Business owners who underreported turnover or profits.
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🌐 NRIs who missed reporting foreign bank accounts or property.
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🪙 Crypto or digital asset traders who failed to file gains.
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🛑 You wish to pay tax voluntarily before a notice arrives.
❌ Who Cannot File ITR-U?
Despite its benefits, ITR-U has limitations. You cannot file ITR-U if:
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You're filing to claim a refund.
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You want to reduce your tax liability.
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Your updated return results in a loss (i.e., to carry forward).
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A search, survey, or assessment notice has already been issued.
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The return includes undisclosed income from sources like black money or benami transactions.
What Is the Cost of Compliance?
Filing ITR-U is not penalty-free. To ensure fairness, the government levies additional tax based on how late you file:
| Filing Timeline (from end of AY) | Additional Tax Payable |
|---|---|
| Within 12 months | 25% of additional tax + interest |
| Between 12–24 months | 50% of additional tax + interest |
| Between 24–48 months (3rd/4th year) | Expected 60%–70% (awaiting final rules) |
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Filing in Year 3 may cost you ₹1,60,000 to ₹1,70,000 total.
Step-by-Step Guide to Filing ITR-U
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Login to Income Tax Portal: https://incometax.gov.in
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Choose ‘File Updated Return (ITR-U)’ under Services.
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Select the Assessment Year to be updated (e.g., AY 2021–22).
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Mention Reason for Updating:
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Return not filed earlier
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Income not reported correctly
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Wrong head of income
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Others (as listed in the form)
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Calculate Total Tax, Interest & Additional Tax
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Pay through Challan ITNS 280 (Self-Assessment Tax).
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Submit the Return with Verification (via Aadhaar OTP, DSC, or EVC).
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Download Acknowledgement for Your Records
Common Scenarios Where ITR-U Can Save You
| Scenario | Eligible? | Notes |
|---|---|---|
| Missed filing return for AY 2021–22 | ✅ Yes | Can now file till 31st March 2026 |
| Filed return, forgot to report FD interest | ✅ Yes | Disclose and pay tax + additional amount |
| Return filed, claimed excess deduction | ✅ Yes | Revise with corrected figures |
| Return filed, now want to claim refund | ❌ No | Refunds or loss adjustments are not allowed under ITR-U |
| Department already issued a notice | ❌ No | ITR-U can’t be filed after initiation of proceedings |
Why ITR-U Matters — Strategic, Not Just Compliant
In the era of AIS (Annual Information Statement) and real-time TDS tracking, the Income Tax Department already knows a lot. What it lacks is your confession — and ITR-U gives you the legal cover to make one before a notice or penalty hits you.
Filing under ITR-U:
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✅ Reduces risk of prosecution or late penalty
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✅ Boosts your tax compliance history (important for loans, tenders, etc.)
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✅ Ends stress from old defaults
Final Thoughts: Don’t Let the Past Become Your Penalty
The ITR-U is not just a compliance tool — it’s a reset button.
If you’ve ever felt anxious about an unfiled return or incorrect income disclosure, this is your chance to proactively correct it. Don't wait for the department to send a notice.
🕒 Remember: The clock is ticking for older years. File now — stay safe, clean, and future-ready.
