The Income Tax Department has issued an advisory urging taxpayers to file their updated Income Tax Return (ITR-U) before March 31, 2025, to avoid higher penalties and additional tax burdens. The department emphasized that timely filing would result in a lower additional tax of 25%, whereas filing after the deadline would increase the tax liability to 50% plus interest.
ALSO READIncome Tax Return 2025: When will ITR filing start? Know the types of Forms and how to fill them online Why File an Updated ITR?
The updated return (ITR-U) allows taxpayers to voluntarily disclose unreported income or rectify errors in previously filed returns. Introduced in 2022, this provision permits taxpayers to revise their ITR within two years of the relevant assessment year by paying additional tax.
Minister of State for Finance Pankaj Chaudhary, in a written reply to the Lok Sabha, stated that as of February 28, 2025, a total of 4.64 lakh updated ITRs had been filed, contributing to Rs 431.20 crore in tax payments.
Time Limit & Tax Implications
The ITR-U filing window allows taxpayers to update their returns within two years, but the tax liability varies based on the timing:
- Before March 31, 2025: 25% additional tax + interest
- After March 31, 2025: 50% additional tax + interest
New Rule from April 2025
In a move to promote voluntary compliance, Finance Minister Nirmala Sitharaman has proposed extending the ITR-U filing period from 24 months to 48 months (4 years). While this gives taxpayers more time to declare undisclosed income, it also comes with higher penalty taxes.
ALSO READTax sleuths to target undisclosed income only IT Department’s Advisory
The Income Tax Department has also issued a reminder on social media platform X, stating:
“Filing ITR-U now = 25% additional tax + interest. Filing after March 31, 2025 = 50% additional tax + interest. Please file updated return of income as per provisions u/s 139(8A) of the IT Act, 1961.”
With the March 31 deadline approaching, taxpayers are advised to act promptly to minimize financial liabilities and ensure compliance with tax regulations.
» Read More
