Major news for income tax payer’s. The deadline for submitting your updated income tax return (ITR-U) is March 31, 2025. If you miss this date, you could face a 50% increase in your tax liability. The Income Tax Department is urging everyone to file their updated ITR promptly to avoid hefty penalties.
Why should you file an updated ITR?
The updated ITR (ITR-U) allows taxpayers to correct any missing or incorrect information voluntarily. This option was introduced by the government in 2022, enabling taxpayers to accurately report their details from the previous assessment year. This facility is available to anyone who has already submitted their original, belated, or revised returns, or even those who haven’t filed at all.
Advantages of filing ITR-U by March 31
If you file your updated ITR by March 31, 2025, you’ll only incur an additional tax and interest of 25%. However, if you file after this date, that additional tax jumps to 50%. Essentially, the longer you wait, the heavier the tax burden becomes. The Income Tax Department has also shared reminders on their official social media to encourage taxpayers to file ITR-U as soon as possible to avoid the 50% extra tax.
How long do you have to file an updated ITR?
The government allows a maximum of two years to file ITR-U. However, during this period, the additional tax liability increases. If you file before March 31, 2025, you’ll face a 25% additional tax on your tax and interest. If you file after that date, the additional tax rises to 50%. Taxpayers who haven’t accurately reported their income for any reason or made mistakes in their previous returns still have time to file ITR-U before March 31, 2025, and only pay the 25% additional tax. Delaying could lead to a burden of 50% or more.
The new regulation is set to take effect in April 2025
Finance Minister Nirmala Sitharaman has suggested extending the deadline for submitting updated Income Tax Returns (ITR) from 24 months to 48 months (4 years), which is anticipated to roll out in the upcoming financial year. While taxpayers will have more time to file their updated ITR under this new rule, they should be aware that longer delays will result in higher penalties. Specifically, if you file your ITR-U after 2 years but before 3 years, you’ll incur an additional 60% tax.
If you file after 3 years but before 4 years, the additional tax jumps to 70%. Essentially, the longer you wait, the more you’ll have to pay in extra taxes. So, it’s best for taxpayers to get their tax return filings done as soon as they can.