By CA Surekha S Ahuja
Your Last Legal Window to Correct Past Returns – AY 2025–26 and Earlier Years
“Data can trigger notices. Only timely compliance can neutralise consequences.”
With the Income-tax Department intensifying data-driven scrutiny under FATCA, CRS, AIS and international exchange mechanisms, a large number of taxpayers are now receiving alerts and notices for non-disclosure or incorrect disclosure of foreign assets and foreign income.
If you are a resident (or RNOR in earlier years) who has:
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Held a foreign bank account
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Invested in foreign shares / ETFs
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Received ESOPs, RSUs or foreign pension
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Held crypto or digital assets outside India
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Earned foreign interest, dividends or capital gains
This is your final legal opportunity to correct past filings before penal and prosecution provisions get triggered.
The Compliance Choices Available Today (At a Glance)
There are three distinct statutory routes, each governed by different sections and deadlines:
| Situation | Applicable Section | Form | Last Date |
|---|---|---|---|
| Revise a timely filed return for AY 2025–26 | Section 139(5) | Original ITR | 31 December 2025 |
| File a belated return for AY 2025–26 (missed original due date) | Section 139(4) | Original ITR | 31 December 2025 |
| Correct / disclose foreign income or assets for past years | Section 139(8A) | ITR-U | FY-wise (up to 5 years) |
AY 2025–26 (FY 2024–25): Immediate Action Required
Who should act before 31 December 2025
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You filed ITR but missed foreign asset disclosure (Schedule FA)
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You declared income but missed foreign interest/dividend
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You used wrong residential status affecting FA disclosure
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You did not file ITR at all for FY 2024–25
Available Options
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Revised Return – Section 139(5)
(If original return already filed) -
Belated Return – Section 139(4)
(If no return filed yet)
After 31 December 2025, neither revision nor belated filing is possible for AY 2025–26.
Past Years (AY 2021–22 to AY 2024–25): ITR-U Is the Only Route
Once the belated return window closes, the only legally permissible method to correct past non-disclosures is Updated Return (ITR-U) under Section 139(8A).
FY-Wise Legal Deadlines
| Financial Year | AY | Belated ITR | ITR-U Deadline |
|---|---|---|---|
| FY 2020–21 | AY 2021–22 | Closed | 31 March 2026 |
| FY 2021–22 | AY 2022–23 | Closed | 31 March 2027 |
| FY 2022–23 | AY 2023–24 | Closed | 31 March 2028 |
| FY 2023–24 | AY 2024–25 | Closed after Dec 2025 | 31 March 2029 |
| FY 2024–25 | AY 2025–26 | Open till 31 Dec 2025 | 31 March 2030 |
As on today, foreign asset holders can:
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File belated ITR for FY 2024–25 (till 31.12.2025)
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File ITR-U for FY 2020–21 to FY 2023–24
What Is ITR-U (Section 139(8A)) – Legal Scope Explained
ITR-U is not a voluntary scheme. It is a statutory correction window.
Who can file
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Any assessee (individual, firm, company)
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To disclose previously unreported income
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To correct foreign asset/income non-disclosure
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Even if return was earlier filed (or not filed)
Who cannot file
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If assessment / reassessment already completed for that year
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If return would result in:
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Refund
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Reduction of tax liability
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Carry forward of loss
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If prosecution already initiated
Additional Tax Cost under ITR-U (Non-Negotiable)
ITR-U carries an additional levy, over and above normal tax and interest.
Levy Structure
| Time from End of AY | Additional Levy |
|---|---|
| Within 12 months | 25% |
| 12–24 months | 50% |
| 24–48 months | 60% |
How Tax Is Computed
Example (FY 2020–21 – Filed by March 2026)
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Undisclosed foreign income: ₹1,00,000
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Base tax + interest: ₹35,800
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Applicable levy: 60%
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Additional tax: ₹21,480
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Total payable: ₹57,280
Slab rates applicable are those of the original financial year, not current slabs.
Comparison: Belated Return vs ITR-U
| Particulars | Belated ITR | ITR-U |
|---|---|---|
| Section | 139(4) | 139(8A) |
| Time window | Limited | Up to 5 years |
| Additional levy | No | Yes (25%–60%) |
| Late fee u/s 234F | ₹1,000–₹5,000 | Not applicable |
| Refund allowed | Yes | No |
| Loss carry forward | Allowed | Not allowed |
Why Immediate Action Is Critical for Foreign Asset Holders
Failure to correct now can expose you to:
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Section 50, Black Money Act – penalty up to 3× tax
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Section 271AAC / 270A – misreporting penalty
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Prosecution risk under BMA
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Reopening under Section 148 based on foreign data
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Compounded interest and denial of immunity
ITR-U is the last statutory shield before enforcement provisions apply.
