Income tax department notifies ITR-U: Extended filing window for updated return, penalties- all you need to know about

NEW DELHI: The Income Tax Department has officially notified the updated return form , called ITR-U , allowing taxpayers with an extended window of four years to rectify or update their income tax returns. This move comes in line with the amendments introduced in the Finance Act, 2025.

Previously, taxpayers had a 24-month period to file an updated return from the end of the relevant assessment year (AY). However, the Finance Act, 2025 has now extended this period to 48 months, offering greater flexibility for individuals and businesses to disclose previously omitted or inaccurately reported income.

Kind attention Taxpayers!

CBDT notifies ITR-U vide Notification No. 49/2025 dated 19.05.2025.

Key updates:

🖋️Time Limit Extended to 48 months via Finance Act, 2025.
🖋️Additional Tax Payable:
Filing in 3rd year: Additional income tax of 60%.
Filing in 4th year:… pic.twitter.com/vSFJJDTbzj

— Income Tax India (@IncomeTaxIndia) May 19, 2025

Reasons to file ITR-U

The ITR-U form facilitates voluntary compliance by allowing taxpayers to file an updated return in cases of:

• Return previously not filed
• Incorrect reporting of income
• Wrong heads of income chosen
• Reduction of carried forward losses
• Reduction of unabsorbed depreciation
• Reduction of tax credit under sections 115JB/115JC
• Application of wrong rate of tax
• Additional tax based on delay

Penalties to be levied

To encourage timely compliance, the Income Tax Department has structured a tiered penalty system based on the time of filing. The system is as follows:

• For ITR-U filed within 12 months from the end of the relevant AY, a 25 per cent additional tax on the due tax amount must be paid.
• For filings between 12 and 24 months, the additional tax rises to 50 per cent.
• For returns updated between 24 and 36 months, 60 per cent additional tax is applicable.
• Filings made between 36 and 48 months will attract a 70 per cent additional tax.

Over the past three years, approximately 90 lakh updated returns have been filed under the earlier provisions, resulting in Rs 8,500 crore of additional revenue for the government, according to PTI report.