Income Tax News: Great! CBDT Enables Filing of Updated ITR up to 4 Years, Check Details

Income Tax News: The Central Board of Direct Taxes (CBDT) has presented the new Income Tax Updated Return (ITR-U) form after the changes made in the Union Budget 2025. This form is effective from April 1, 2025. The objective of this ITR-U is to provide taxpayers a chance to correct any errors made in old tax filing. This rule is to help in following tax rules and correcting mistakes but it cannot be used for reducing tax or getting a refund.

What is ITR-U Form?

ITR-U or Updated Income Tax Return is a form that allows a taxpayer to correct any error or omission by updating old ITR.  The government introduced this concept of in the Union Budget 2022. Till now updated ITR could be filed up to 2 years. The ITR-U form is for the people who could not file their original ITR or they have done any type of mistake in previous ITR. This form gives taxpayers a chance to correct their mistakes but it cannot be used to reduce the previous income or for refund. It allows only for updating information about extra income or rectifying errors.

What is Change in ITR-U Form?

CBDT has announced that taxpayers can file updater ITR up to 4 years from this financial year i.e. April1, 2025. As per new rule, taxpayers are allowed up to 4 years to correct their mistakes in previous ITR. Earlier the time period allowed was only up to 2 years. It means time period for updated income tax return is doubled now. For example, if you file ITR for the financial year 2024-25 this year, you can file ITR-U form for this till financial year 2029-30. 

Penalty and Other Charges in ITR-U

Filing ITR-U is not free. It will charge a penalty depending on the time of filing of updated return.  As time increasers penalty increases and vice versa. 
•    ITR-U filing in the first year will be charged 25% extra tax and interest. 
•    ITR-U filing in the second year will be charged 50% extra tax and interest 
•    ITR-U filing in the third year will be charged additional 60% tax and interest.
•    In the fourth year, ITR-U filing will be charged 70% extra tax and interest.
This penalty system is to encourage taxpayers to file their updated ITR as soon as possible to correct mistakes in previous ITR.

New change for updated ITR will make taxpayers able to correct the errors up to 4 years in their old ITR filed U but it will also attract additional tax and interest charge which will keep on increasing on delay of updated return.