Income Tax Return: Good news for taxpayers! Now you can file updated ITR for 4 years – CBDT’s big announcement
Income Tax Return: The purpose of ITR-U is to give taxpayers an opportunity to correct any kind of mistake made in old tax filing. This rule will help in making compliance of tax rules easier and correcting mistakes.
Income Tax Update: If you also file Income Tax Return (ITR) every year, then this news is of use to you. The Central Board of Direct Taxes (CBDT) has introduced the Income Tax Updated Return (ITR-U) form after the changes made in the Union Budget 2025. This form will come into effect from April 1, 2025. The purpose of ITR-U is to give taxpayers an opportunity to correct any mistakes made in old tax filing. This rule will help in making it easier to follow tax rules and correct mistakes. But it cannot be used to reduce tax or get a refund.
Time increased from 24 months to 48 months
Under the new rules, taxpayers will be given 48 months (4 years) to correct their mistakes. Earlier this time period was only 24 months. That is, now this time limit has doubled. For example, if you are filing tax return for the financial year 2024-25, whose assessment year is 2025-26, then you can file ITR-U form by March 31, 2030. In this long time, the taxpayer will be able to rectify his mistakes.
Who can file ITR-U?
The ITR-U form is for those people who could not file their original tax return. Or they have given wrong information about their income or wrong tax rate or have chosen the wrong type of income. This form gives taxpayers a chance to correct their mistakes. But it cannot be used to reduce the previously stated income or to seek refund. It is only for giving information about extra income or correcting mistakes.
How to file ITR-U?
Under the new rules, ITR-U form can be filed only after the assessment year ends. The last date for filing tax return is 31 July. If this date is missed, then late return can be filed till 31 December. After this, ITR-U form is the only option left. For example, the basic return for FY 2024-25 has to be filed by July 31, 2025. If this is missed, then ITR-U can be filed till 31 December 2025 and if this is also not known, then from 1 April 2026. While filing the form, the taxpayer will have to verify the return by selecting the period from the drop-down menu.
Penalty and time limit
Filing ITR-U will attract a penalty, which depends on how early the return is filed. Filing it in the first year attracts 25% extra tax and interest. If you file it in the second year, then 50% extra tax and interest will be charged. This increases to 60% tax and interest in the third year. Similarly, in the fourth year, 70% extra tax and interest will have to be paid on it. This penalty system encourages taxpayers to correct mistakes quickly.
Legal changes and benefits
The Finance Act 2025 amended section 139(8A), under which the time limit for filing ITR-U has been increased from 24 months to 48 months. This change is a big step towards making tax filing easy and accurate.
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