India Extends Deadline for Updated Tax Returns to 48 Months

In a significant development, the Income Tax Department in India has recently enabled the option for taxpayers to file updated income tax returns (ITR-U) for assessment years 2021-22 and 2022-23. This change was announced in the Union Budget 2025, which extended the deadline for filing updated returns from 24 months to 48 months from the end of the relevant assessment year.

The new ITR-U provision provides an opportunity for voluntary compliance, allowing individuals to rectify any errors or omissions in their previous tax filings. Taxpayers can now file an updated return within 48 months, even if they did not submit an original, revised, or belated return earlier. This extended window aims to reduce litigation and improve overall tax compliance.

However, there are some restrictions on who can file an updated return and when. A penalty will be applicable, ranging from 25% to 70% of the additional tax payable, depending on the time elapsed since the end of the assessment year. Specifically, a 25% penalty applies if the updated return is filed within 12 months, 50% if filed between 12-24 months, 60% if filed between 24-36 months, and 70% if filed between 36-48 months.

The new ITR-U option is expected to provide much-needed relief to taxpayers, allowing them to rectify past mistakes and ensure accurate tax compliance without prolonged legal battles.