All about ITR-U (Updated Income Tax Return) to help taxpayers correct their mistakes

Filing taxes can be confusing, especially for NRIs who manage income in multiple countries. Sometimes, you might forget to report income, claim the wrong deduction, or even miss filing your return altogether. If this sounds familiar, don’t stress! ITR-U is to the rescue.

In the 2022 Union Budget, the Indian government has introduced ITR-U (Updated Income Tax Return) to help taxpayers correct their mistakes without major penalties. 

Even better, the 2025 Budget has now extended the time limit for filing an updated return from 24 months to 48 months. This means you have four years to fix any errors in your tax return and ensure compliance, but there is more to it.

In this blog, we will know more about ITR-U & the new rules about updated income tax return announced in Budget 2025.

What is ITR-U?

Introduced in the Union Budget 2022, ITR-U, or the Updated Income Tax Return, is a provision under Section 139(8A) of the Income Tax Act. It is a form that allows taxpayers to correct or update their tax return within 48 months (earlier 24 months) from the end of the relevant assessment year.

As of February 2025, taxpayers can file an updated return within 48 months (four years) from the end of the relevant assessment year. This extension was introduced in the 2025 Budget to provide taxpayers with ample time to ensure their tax filings are accurate.

Example: If you filed your tax return for the financial year 2020-21 (assessment year 2021-22) and later realized you forgot to report certain income, you have until March 31, 2026, to file an updated return for that year.

This option is available even if the taxpayer has already filed:

• an original return (ITR filed within the due date under Section 139(1)),
• a belated return (filed after the due date under Section 139(4)),
• or a revised return (filed to correct errors under Section 139(5))

Filing deadlines for FY 2023-24: What NRIs need to know

The deadline to file a belated ITR for FY 2023-24 was 31st December 2024. If you missed it, you can still file an updated return (ITR-U), but only if you have additional tax to pay. This applies in cases such as an NRI’s KYC not being updated or capital gains being realized without TDS deduction, and more such cases.

If you were expecting a refund but missed the deadline, you can no longer file your return. ITR-U cannot be used to claim a refund or reduce tax liability – it is only applicable when additional tax is due. Since the deadline for filing a belated return has passed, any excess TDS deducted cannot be reclaimed through ITR-U.

For NRIs, most incomes—such as capital gains, rental income, and interest—are already taxed at high rates under Section 195. This makes it crucial to file ITR on time rather than relying on ITR-U. Missing the deadline could mean losing out on rightful refunds.

ITR filing for FY 2024-25 (AY 2025-26) is still open. Don’t miss this chance—the last date to file your ITR for FY 2024-25 is 31st July 2025. Our NRI tax experts can help you ensure a smooth and hassle-free refund process!

NRIs can also benefit from DTAA (Double Taxation Avoidance Agreements) to avoid overpaying taxes. If you’re unsure about your tax status or need guidance, consulting a tax expert can help you find the best way forward.

Also read: Missed Your ITR Filing? Here’s What You Can Do

Budget 2025 update: Extended deadline for filing ITR-U

Filing belated or revised ITRs after December 31 of the assessment year is not possible. 

However, you can file an updated return using the ITR-U form from January 1 of the assessment year, which allows you to correct minor errors or omissions in your original ITR. It is important to note that ITR-U cannot be used to reduce tax liability, claim refunds, or increase reported losses.

To make tax compliance more flexible, the government has extended the deadline for filing an updated return from two years to four years from the end of the relevant assessment year. This extension provides taxpayers with a longer window to address errors, report unaccounted income, and maintain compliance without facing severe penalties.

However, an additional tax must be paid while submitting ITR-U, and the applicable surcharge increases over time.

Let’s get into details:

Penalty for filing ITR-U

Since ITR-U is for reporting extra tax that was missed earlier, taxpayers have to pay a penalty. This penalty has two parts— interest on the unpaid tax and an additional charge based on how late the filing is.

Let’s first understand how interest is calculated:

Interest Under Sections 234A and 234B:

• Section 234A: If you file your Income Tax Return (ITR) after the due date, interest is charged at 1% per month or part of a month on the outstanding tax amount from the due date until the actual filing date.
  
• Section 234B: If you have unpaid tax exceeding ₹10,000 and have either not paid advance tax or paid less than 90% of the assessed tax, interest is levied at 1% per month or part of a month from April 1 of the assessment year until the date of payment.

Additional Tax Payable When Filing ITR-U:

When filing an updated return (ITR-U), an additional tax is charged on the total tax due, including interest. The amount depends on how late the return is filed:

This means that the longer the delay in filing the updated return, the higher the additional tax payable.

For example:

Let’s say you owe ₹10,000 in additional tax and you decide to file an updated return (ITR-U) after 18 months from the original due date. Here’s how the total payment adds up:

• Interest (1% per month for 18 months): ₹1,800
• Total tax + interest: ₹11,800
• Penalty (50% of ₹11,800 for 12-24 months delay): ₹5,900
• Final amount payable: ₹17,700

Wait longer, and the penalty keeps increasing:

• After 24 months (60% penalty): ₹18,880
• After 36 months (70% penalty): ₹20,060
• After 48 months (70% penalty): ₹20,060

The longer you delay, the more you pay!

So, if you delay filing for 48 months, your total payment can more than double. Filing sooner helps reduce penalties.

Time limit for filing ITR-U

Check out the final deadline for submitting ITR-U for different Assessment Years.

With this extended timeframe, taxpayers have greater flexibility to ensure accurate tax filings while avoiding legal complications. It also provides relief for NRIs who may have struggled with tax compliance due to time constraints or lack of awareness.

What happens if you miss the 48-month deadline?

If you don’t file your ITR-U within the allowed 48 months, you lose the chance to fix any mistakes in your tax return. This means:

• You won’t be able to correct past errors, even if you realize them later.
• The Income Tax Department may send you notices for discrepancies in your filings.
• If the tax authorities catch the mistake first, you could face higher penalties.

Who can file ITR-U?

Normal citizens or NRIs may file ITR-U if:

• Missed Filing: If you did not file your tax return for a particular financial year.
• Income Omission: If you forgot to report income like rental earnings, interest, or salary received in India.
• Incorrect Income Reporting: If you misclassified your income under the wrong head.
• Wrong Deductions or Exemptions: If you claimed benefits that were not applicable.
• Underreported Income: If your total taxable income was reported incorrectly.
• Reduction of Carried Forward Losses: If you need to adjust previously reported losses meant for future years.
• Adjustment of Tax Credits: If you need to revise tax credit claims under sections like 115JB (MAT) or 115JC (AMT).

Who Cannot File ITR-U?

The option to file ITR-U is not available in the following cases:

• Ongoing Assessment: If the Income Tax Department has already initiated an assessment of your return.
• Tax Fraud Investigation: If you are under investigation for tax fraud or evasion.
• Scrutiny or Reassessment: If your return is part of an ongoing scrutiny or reassessment process.
• Refund Claims: ITR-U cannot be used to claim a higher refund—it is meant for cases where additional tax is due.
• No Additional Tax Liability: If the updated return does not result in any extra tax payable.
• Reduced Tax or Increased Refund: If filing the updated return would lower your tax liability or increase your refund.
• Search or Survey Cases: If the Income Tax Department has conducted a search or survey operation against you.
• Pending Proceedings or Prosecution: If you are facing ongoing assessment proceedings or prosecution under the Income Tax Act.

How to file ITR-U?

• Download the ITR-U Form: Access the form from the Income Tax Department’s official e-filing portal.

Download ITR-U form

• Fill in the Required Details: Provide accurate information, including the reasons for updating the return and the additional income being reported.
• Compute the Tax Payable: Declare the additional income and calculate the additional tax liability, including any applicable interest and late fees.
• Pay the Additional Tax and Penalties: Use the designated challan to pay the due amount. Pay the additional tax along with the applicable penalty.
• Submit the Updated Return: Upload the completed form and payment details on the e-filing portal. Retain a copy of the acknowledgment for future reference.

Process feels complex?

Frequently Asked Questions (FAQs)

1. Can I use ITR-U to correct mistakes in my past tax returns?
Yes, ITR-U allows you to correct errors such as unreported income, incorrect deductions, and underreported tax liability.

2. Can I use ITR-U to claim a refund?
No, ITR-U is only for paying additional tax. Hence it is very important for NRIs to file your ITR on time.

3. How long do I have to file ITR-U?
You now have 48 months from the end of the relevant assessment year to file an updated return.

4. What is the penalty for filing ITR-U late?
If you file within 12 months, you will pay an additional 25% of the due tax. If you file after 12 months but within 48 months, the penalty can increase up to 70%, depending upon the delay.

5. Can I file ITR-U if the tax department has already started an investigation?
No, ITR-U is not available if your return is under scrutiny or investigation by the tax authorities.

6. What happens if I fail to file ITR-U within the deadline?
If you miss the 48-month deadline, you will lose the chance to rectify mistakes and may face penalties or legal consequences.

7. Do NRIs need to pay tax on income earned outside India?
NRIs are only taxed on income earned/accrued in India or income received in India. Foreign income is not required to be reported in India.

8. How Many Times Can I File ITR-U for the Same Assessment Year?

You can file ITR-U only once for a particular assessment year. This means you have a single opportunity to correct or update your return for each year. The e-filing portal permits filing ITR-U only once for a particular assessment year under Section 139(8A). Therefore, it’s crucial to ensure all corrections are included before submission.

9. Can I File ITR-U If I Do Not Have Any Tax Payable?

No, you cannot file an updated return if there is no additional tax liability. If your total tax liability is already covered through Tax Deducted at Source (TDS) or other credits, and there is no additional tax to be paid, you cannot file an updated return. ITR-U is designed to report and pay additional taxes, not to claim refunds or reduce tax liability.

7. Can I Change My Tax Regime While Filing ITR-U?

No, you cannot change your tax regime when filing an updated return. The choice between the old and new tax regimes must be made within the original filing deadline under Section 139(1). Once selected, it cannot be changed when filing an updated return.

For Non-Business Taxpayers (ITR-1 & ITR-2):

• Individuals can choose between the old and new tax regimes each year.
• The choice must be finalized before the original filing deadline for that assessment year.

For Business Taxpayers (ITR-3 & ITR-4):

• Business taxpayers can switch their tax regime only once by submitting Form 10IE.
• This must be done before the original filing deadline under Section 139(1).