Missed Your ITR Deadline? Here’s How ITR-U Can Help and What It Will Cost You

In a major relief for taxpayers, the Income Tax Department has launched a new version of the ITR-U form, extending the time limit for filing updated income tax returns to 48 months. The new rules, announced in the Union Budget 2025, came into effect on April 1, 2025.

What Is ITR-U?

ITR-U, or the Income Tax Updated Return, is a special return that allows individuals and businesses to correct past mistakes or missed filings. It is designed for those who either forgot to file their returns, reported incorrect income, selected the wrong income head, or applied the wrong tax rate.

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Importantly, the ITR-U cannot be used to claim refunds or reduce previously declared income. It is only meant to report additional income or fix previous errors.

Extended Time Limit: Up to 48 Months

Until now, the time limit for filing an updated return was 24 months from the end of the relevant assessment year. The revised rules have doubled that window to 48 months (4 years), giving taxpayers more flexibility and time to comply.

For instance, for the financial year 2024–25 (assessment year 2025–26), if you miss the standard deadline of July 31, 2025, and even the belated return deadline of December 31, 2025, you can still file an updated return between April 1, 2026, and March 31, 2030.

Who Can File ITR-U?

Anyone—regardless of whether they filed an original return—can file using ITR-U. It is particularly useful for those who:

• Failed to file any return at all
• Disclosed lower income earlier
• Made clerical or technical errors
• Applied the wrong tax rate

However, it cannot be used to reduce tax liability or claim fresh refunds.

Penalty Charges for Late Filing

With the extended timeline come steeper penalty slabs. The longer you wait to file an updated return, the higher the cost:

• Within 12 months: 25% of tax and interest
• 12–24 months: 50%
• 24–36 months: 60%
• 36–48 months: 70%

These penalties are imposed in addition to your tax liability and interest.

Verification Still Mandatory

Once the updated return is filed, it must be verified through the usual methods—Aadhaar OTP, net banking, or digital signature—just like a regular income tax return.

Final Word

The revamped ITR-U mechanism is part of the government’s push toward voluntary compliance and greater transparency in tax reporting. With a more generous window and clear guidelines, taxpayers now have a better opportunity to set their records straight—albeit at a cost.