If you’ve missed declaring income or made errors in your previous tax return, here’s a big income tax update you simply can’t ignore. The Income Tax Department is warning taxpayers: you might face up to 50% additional tax and interest if you delay filing your updated return under the Income Tax Return – Updated (ITR-U) provision.
This is not just a minor fine—it’s a hefty penalty that could cost thousands of rupees if you don’t act before the deadline. Whether you’re a salaried individual, business owner, or financial professional, understanding this update is crucial to stay compliant and avoid unexpected tax burdens.
Big News on Income Tax: You May Have to Pay 50% Extra Tax
| Details | Information |
|---|---|
| Topic | 50% extra tax and interest for delayed updated ITR filing |
| Applies to | All taxpayers: individuals, professionals, HUFs, companies |
| Provision | Updated Income Tax Return (ITR-U) under Section 139(8A) |
| Last date for AY 2023–24 | March 31, 2025 |
| Penalty if filed before March 31, 2025 | 25% of tax and interest due |
| Penalty if filed between April 1, 2025 – March 31, 2026 | 50% of tax and interest due |
This latest income tax update is a wake-up call for anyone who’s made mistakes in past returns. If you think the tax department won’t notice—think again. With stronger data tracking, you’re more likely than ever to be caught, and the price of inaction is now as high as 50% extra tax and interest.
What is an Updated Return (ITR-U)?
The Updated Return, introduced by the Finance Act 2022 under Section 139(8A), allows taxpayers to voluntarily correct errors or omissions in their original or belated tax returns.
Maybe you forgot to disclose some income from side gigs, rental property, or capital gains. Or perhaps your accountant missed a TDS entry. With ITR-U, you can declare such income and pay the additional tax, but if you wait too long, the cost goes up significantly.
The government created ITR-U to encourage voluntary compliance and reduce litigation. But it comes with a strict time limit and rising penalties the longer you wait.
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When Do You Have to Pay 50% Extra Tax?
The updated return for a given assessment year (AY) can be filed within 24 months from the end of that AY. However:
- If filed within 12–24 months, you must pay 50% additional tax on the total tax and interest due.
- If filed within 12 months, the additional tax is only 25%.
Example:
Let’s say you forgot to report ₹2 lakh income in AY 2023–24, and the additional tax comes to ₹40,000 with ₹5,000 interest.
- If you file before March 31, 2025, you’ll pay:
→ ₹40,000 (tax) + ₹5,000 (interest) + ₹11,250 (25% of tax + interest) = ₹56,250 - If you file after April 1, 2025, you’ll pay:
→ ₹40,000 + ₹5,000 + ₹22,500 (50% of tax + interest) = ₹67,500
That’s a ₹11,250 difference—a penalty you can avoid by acting early.
How to File an Updated Return (ITR-U)
Here’s how you can file ITR-U and avoid the 50% tax shock:
Step 1: Check Your Assessment Year
You can update returns for AYs 2021–22, 2022–23, and 2023–24 as of now. For AY 2023–24, the last date is March 31, 2025.
Step 2: Login to the Income Tax Portal
Login with your PAN and password, then go to “e-File” > “Income Tax Forms” > “File Income Tax Forms”, and select ITR-U.
Step 3: Select the Reason for Filing ITR-U
You must choose one or more reasons:
- Income not reported
- Wrong heads of income
- Reduction in carried-forward loss
- Wrong rate of tax
Step 4: Pay the Additional Tax
Calculate your total tax liability, including surcharge, cess, interest, and the additional 25% or 50% tax, as applicable. Use Challan No. ITNS 280 for payment.
Step 5: Submit and Verify
Once all information is entered, submit the form and verify using Aadhaar OTP, EVC, or Digital Signature.
Important Deadlines to Remember
| Assessment Year | Deadline for 25% Additional Tax | Deadline for 50% Additional Tax |
|---|---|---|
| AY 2023–24 | March 31, 2025 | March 31, 2026 |
| AY 2022–23 | March 31, 2024 (expired) | March 31, 2025 |
| AY 2021–22 | March 31, 2023 (expired) | March 31, 2024 (expired) |
After these deadlines, you cannot file an updated return—which could lead to prosecution if unreported income is later discovered.
New Rules Coming in April 2025: Even Higher Penalties
The government is planning to extend the ITR-U filing period to 4 years, starting April 1, 2025. But this comes with steeper penalties:
- File after 2 years → 60% additional tax
- File after 3 years → 70% additional tax
So, while you may get more time, delaying could get extremely expensive.
Who Should File ITR-U?
This provision is beneficial for:
- Salaried individuals who forgot to report side income
- Freelancers or consultants with inconsistent income declarations
- Property owners missing rent or capital gains data
- Traders or investors who didn’t account for market earnings
- Small businesses that missed income entries or TDS mismatches
Common Mistakes That Could Cost You
You may face 50% extra tax if you made any of the following errors:
- Missed reporting interest from savings, FDs, or PPF
- Omitted rental income or foreign income
- Forgot to include capital gains from shares or mutual funds
- Filed under the wrong ITR form
- Made a calculation error or typo
Why Acting Early Saves Money
Let’s break it down simply:
- Filing now = 25% penalty
- Waiting another year = 50% penalty
- From 2025 = 60–70% penalty
Early action equals smaller penalty. Plus, it saves you from:
- Notices under Section 148 (Income escaping assessment)
- Prosecution under Section 276CC
- Long-term interest and legal costs
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Big News on Income Tax FAQs
Q. Can I revise my ITR multiple times using ITR-U?
No. You can file ITR-U only once per assessment year, so make sure it’s accurate.
Q. What if I already filed a revised return?
You can still file ITR-U if new errors are found, but only if you haven’t used ITR-U before for that AY.
Q. Will I get a refund under ITR-U?
No. You cannot claim a refund while filing ITR-U. It’s only for additional disclosures.
Q. Is filing ITR-U mandatory?
No, it’s optional—but strongly advised if you have missed income, to avoid penalties and legal action later.
Q. Can salaried individuals use ITR-U?
Yes, absolutely. Even if your employer deducted TDS, you’re responsible for accurate self-declaration.
