ITR-U: Tax Payers Can Use This Provision If They Miss ITR-Filing Date

Union Budget 2025 has extended the filing period for ITR-Updated by two more years. This means, there is now a longer window for taxpayers who missed filing or underreported their income.

However, the cost of delay increases significantly. The ideal course of action remains filing the original return on time and ensuring all income is correctly declared.

Union Budget 2025 announced extension of the filing period for ITR-U by two more years, making the total provision four years. This change provides a longer window for taxpayers who missed filing or underreported their income. The original due date for individuals for financial year 2024-25, which ends March 2025, is July 31, 2025.

Introduced in Budget 2022, the ITR-U or Updated Income Tax Return is a provision that allows taxpayers to rectify errors or omissions and update their previous ITR. Taxpayers can file returns until Dec. 31, 2025, but there are some restrictions.

A 12-month delay from deadline will cost 25% of additional tax with interest. In case of 24-month delay from the relevant accounting year, there will be 50% additional tax plus interest.

A delay of 36 months from the end of the relevant accounting year will cost the tax payer 60% additional tax with interest. A delay of 48 months from the deadline of the respective accounting year will cost 70% additional tax along with interest.

An Updated Return can be filed in case of a missed return filing deadline. This provision can also be used when the income is not declared correctly or if the taxpayer has erroneously chosen the wrong head of income.

The provision also applies in cases where the tax was paid at the wrong rate. The updated return facility can be used to reduce the carried forward loss. Finally, taxpayers can also use this provision to reduce the unabsorbed depreciation.