Now, you get 4 years to file updated ITR

In case taxpayers forgot to report some income while filing returns anytime in the past four fiscal years, Budget 2025 has good news for them. The timeline to file an updated income tax return has been increased to four years from two years starting April 2025.

- Sashind Ningthoukhongjam

MUMBAI:

To be sure, an updated ITR can only be filed to report a higher tax liability, unlike a revised return that can modify ITR to include deductions and reduce tax liability.

Introduced in April 2022, this provision in the Income Tax Act allows taxpayers to report income by paying additional tax on it if they missed filing it before. Using this, they can also file their ITR if they had missed filing it earlier.

This "trust in taxpayers" resulted in nearly 9 million people updating their returns with correct incomes, Union finance minister Nirmala Sitharaman said in her eighth budget speech on Saturday. "Taking this trust further, I now propose to extend the time limit to file updated returns for any assessment year from the current limit of two years to four years," the finance minister said in her speech.

According to the proposed provisions, additional tax of 60% and 70% is payable if the return is filed between 24-36 months and 36-48 months respectively, from the end of the concerned assessment year.