Updated returns: A second chance to get your taxes right

Filing updated returns has specific requirements, including paying a percentage of the additional tax liability, which depends on the filing timeframe.

The income tax landscape has witnessed significant changes in recent times, and one of the most notable is the proposed timeframe for filing updated returns extended from 24 months to 48 months from the end of the relevant assessment year.

This move enables taxpayers to proactively rectify errors or omissions in their original or belated returns. Here are details of the changes to the updated returns filing process.

A guide to updated returns

Introduced in 2022, the updated return facility enables taxpayers to proactively rectify errors or omissions in their original or belated tax returns.

An updated return can be filed only after the due date for original, revised or belated returns has passed. The purpose of filing an updated return is to declare additional income and pay the resulting additional tax. Notably, an updated return cannot be revised once filed.

There are specific limitations on filing updated returns. For example, you can't file an updated return to claim a loss or increase your refund amount. Additionally, the updated return shouldn't lead to a decrease in your tax liability.

If a taxpayer misses the December 31 deadline, they can still file an updated return (ITR-U) under Section 139(8A) of the Income-tax Act within four years from the end of the relevant assessment year.

"It must be noted that filing updated returns extended to 48 months is subject to the changes proposed and will come into existence after Income Tax Bill is passed," says SR Patnaik, Partner (head - taxation), Cyril Amarchand Mangaldas.

Also read | ITR filing 2025: Used the wrong form? Revise your return to rectify the error

Additional tax on updated returns

Filing an updated return has its own requirements, including paying a percentage of the additional tax liability, which depends on the filing timeframe.

Specifically, if you file an updated return within 12 months of the assessment year end, you'll need to pay 25 percent of the additional tax. This percentage increases to 50 percent if filed within 24 months, 60 percent within 36 months, and 70 percent within 48 months of the assessment year end.

The additional tax levy of 25-70 percent of the tax and interest due substantially hikes the total tax liability for taxpayers.

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Caveats in extending updated returns to 48 months

Filing updated returns has some other restrictions. If the income tax department initiates reassessment proceedings, you can't file an updated return within 36 months. However, if the proceedings are later dropped, you can still file an updated return within the 48-month limit.