What Is the Penalty for Filing an Updated Return (ITR-U)?
What Is the Penalty for Filing an Updated Return (ITR-U)?
Complete Guide for FY 2024–25 | AY 2025–26
The introduction of the Updated Return (ITR-U) under Section 139(8A) of the Income Tax Act has given taxpayers a second chance to voluntarily correct missed or misreported incomes.
But filing an Updated Return doesn’t come free — there are additional penalties and taxes attached.
"What is the penalty if I file an Updated Return?"
Let’s break it down in simple and practical terms.
✅ What Is an Updated Return (ITR-U)?
The Updated Return allows taxpayers to:
- File a return even if they missed the original deadline.
- Correct errors or omissions in previously filed returns.
- Pay any additional taxes voluntarily before the Income Tax Department initiates action.
You can file an ITR-U within two years from the end of the relevant Assessment Year.
❌ When Is an Updated Return Not Allowed?
You cannot file an Updated Return if:
- You want to claim a higher refund.
- You want to reduce your tax liability.
- Your case is already under scrutiny or reassessment by the tax department.
The Updated Return is meant only if it results in an additional tax payment.
💰 What Is the Penalty for Filing an Updated Return?
If you file an Updated Return, apart from the regular tax and interest payable under sections 234A, 234B, and 234C, you also have to pay an Additional Tax.
|
Filing Timeline after Assessment Year |
Additional Tax Payable |
|
Within 12 months |
25% of tax + interest |
|
Between 12–24 months |
50% of tax + interest |
✅ Key Point:
- This additional tax is calculated on the total tax and interest amount.
- It is a penalty for late disclosure of income.
🔹 Example to Understand Better
Suppose your total additional tax liability (basic tax + interest) comes to ₹1,00,000:
- If you file Updated Return within 1 year ➔ You pay ₹1,00,000 + ₹25,000 (25%) = ₹1,25,000
- If you file Updated Return between 1–2 years ➔ You pay ₹1,00,000 + ₹50,000 (50%) = ₹1,50,000
Thus, the longer you wait, the higher the penalty you pay!
📋 Important Points to Remember
- You must pay all taxes, interest, and additional tax before submitting the Updated Return.
- Updated Return filing requires attaching a proof of self-assessment tax payment (Challan 280).
- Filing without paying the due tax will make the ITR-U invalid.
🧾 How to File an Updated Return?
- Log in to the Income Tax e-Filing Portal.
- Select 'File Income Tax Return' → Choose 'Updated Return (ITR-U)'.
- Choose the relevant Assessment Year.
- Provide reason(s) for updating the return.
- Calculate total tax + interest + additional tax.
- Pay the tax via a challan and upload the details.
- Submit and e-verify your ITR-U.
✅ Final Words
"Filing an Updated Return is a smart move if you missed reporting income, but it comes with a financial cost."
You must pay regular tax, interest, plus an additional 25% or 50% penalty, depending on when you file it.
Still, filing voluntarily through ITR-U is far better than getting a notice, facing audits, penalties, and prosecution later.
