ITR-U filing before March 31: Last chance to update old tax returns and avoid higher penalty

If you missed reporting income or made an error in your Income Tax Return, the option to correct it through an Updated Income Tax Return (ITR-U) is still available. However, with the March 31 deadline approaching, taxpayers who want to update old returns should act quickly, as the additional tax payable increases with delay and the window for certain assessment years will soon close.

The Income Tax Department allows taxpayers to file an updated return under Section 139(8A) of the Income-tax Act to disclose missed income, correct mistakes, or file a return that was never submitted earlier. The facility is available even if the original return, belated return, or revised return was not filed within the due date.

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March 31 deadline

Taxpayers can file ITR-U within 48 months from the end of the relevant assessment year. This means the updated return for Assessment Year 2021-22 can be filed only up to March 31, 2026. After this date, the option to update that year’s return will no longer be available.

For later years, the window remains open for longer. For example, the updated return for AY 2025-26 can be filed up to March 31, 2030. However, March 31 every year remains a critical date because the amount of additional tax payable increases the later the return is filed.

What is ITR-U and who should file it

ITR-U is meant for taxpayers who need to voluntarily correct their tax records. It can be used to report previously undisclosed income, correct wrong claims, or update details in a return already filed. The provision is designed to encourage voluntary compliance and reduce the risk of penalties or legal action later.

Unlike a revised return, which is meant for minor corrections, an updated return is generally used when income was not reported or tax was underpaid. Filing ITR-U requires payment of the due tax along with interest and an additional amount depending on how late the return is filed.

Additional tax increases with delay

The law requires taxpayers filing ITR-U to pay extra tax over and above the normal liability. The additional amount depends on how long after the assessment year the updated return is filed.

If filed within 12 months from the end of the assessment year, the extra tax is 25% of the tax and interest due.
Between 12 and 24 months, the additional tax rises to 50%.
Between 24 and 36 months, it increases further, and for returns filed between 36 and 48 months, the additional tax becomes significantly higher.

Because of this structure, waiting until the last year of eligibility can make the total tax payable much larger.

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Changes announced in Budget 2026

Recent changes have made the ITR-U option more flexible. Taxpayers are now allowed to file an updated return even in certain cases where reassessment proceedings have started, although this may attract extra tax. In addition, the updated return now allows adjustment of losses in some cases, which was not permitted earlier.

Why filing before March 31 matters

Failing to update a return within the allowed time may lead to notices, reassessment, or penalties if the tax department later finds undisclosed income. Filing ITR-U before March 31 can help taxpayers regularise past mistakes, reduce the additional tax burden, and avoid future disputes.