ITR Filing Mistake? Don’t Worry! Here’s How to File an Updated Return (ITR-U) for AY 2025-26

The annual ritual of filing your Income Tax Return (ITR) is a cornerstone of responsible financial citizenship. However, in the rush to meet the deadline, or due to a simple oversight, mistakes can happen. Perhaps you forgot to declare interest income from a fixed deposit, missed out on reporting capital gains from a mutual fund sale, or chose the wrong ITR form. In the past, such errors could lead to sleepless nights, fearing a notice from the Income Tax Department.

Fortunately, the tax landscape has evolved. Introduced in the Finance Act 2022, Section 139(8A) of the Income Tax Act provides a powerful safety net for taxpayers: the Updated Return, or ITR-U. This provision allows you to voluntarily correct mistakes or report previously omitted income long after the original and revised return filing deadlines have passed.

This comprehensive guide will walk you through everything you need to know about filing ITR-U for the Assessment Year (AY) 2025-26, helping you achieve tax compliance and peace of mind.

What Exactly is an Updated Return (ITR-U)?

Think of ITR-U as a second chance to make things right with the taxman. It is a form that allows taxpayers to update their returns by correcting errors or omissions, thereby ensuring accurate income disclosure. The primary objective behind its introduction was to promote voluntary tax compliance and reduce potential litigation.

It’s crucial to understand that ITR-U is fundamentally different from a Revised Return (filed under Section 139(5)).

• Revised Return: This is filed to correct a mistake in your original ITR. It must be filed before the deadline for filing a revised return (currently, three months before the end of the relevant assessment year, i.e., by 31st December of the AY). It carries no penalty.
• Updated Return (ITR-U): This is filed when the deadline for both original and revised returns has expired. It is a mechanism to report income you missed reporting or to correct other specific errors. Filing an ITR-U always involves paying an additional tax.

In essence, ITR-U is your recourse when the window for revising your return has closed, but you’ve discovered an error that needs fixing.

The Clock is Ticking: Understanding the ITR-U Time Limit

The government provides a generous window to file an ITR-U. You can file an updated return at any time within 24 months (two years) from the end of the relevant Assessment Year.

Let’s break this down for the upcoming filing season:

• Financial Year (FY) 2024-25: This is the period from April 1, 2024, to March 31, 2025. This is the year in which you earn your income.
• Assessment Year (AY) 2025-26: This is the year following the financial year, in which the income earned in the FY is assessed. It runs from April 1, 2025, to March 31, 2026.

The 24-month countdown for filing ITR-U for AY 2025-26 begins from the end of the Assessment Year.

• End of AY 2025-26: March 31, 2026
• 24 months from this date: March 31, 2028

Therefore, you have until March 31, 2028, to file an ITR-U for any income-related errors or omissions pertaining to the income you earned between April 1, 2024, and March 31, 2025.

Who Can (and Who Cannot) File an ITR-U?

While ITR-U is a helpful tool, it’s not a free-for-all. The Income Tax Department has laid out clear eligibility criteria and, more importantly, specific exclusions.

You CAN file an ITR-U if:

• You did not file your original return and missed the deadline.
• You have already filed a return but need to report additional income that was missed (e.g., forgot to include interest income, rental income, or capital gains).
• You chose the wrong head of income in your original return (e.g., reported income under “Other Sources” instead of “Capital Gains”).
• You need to reduce a carried-forward loss.
• You need to reduce an unabsorbed depreciation.
• You need to reduce a tax credit under Section 115JB/115JC.

You CANNOT file an ITR-U if:

This is the most critical part to understand. Filing an ITR-U is not permissible if it results in a benefit to you. You cannot file an ITR-U if the updated return:

1. Is a Nil Return or a Loss Return: You cannot file an ITR-U to declare a loss for the first time or increase the loss declared in a previously filed return.
2. Reduces Your Tax Liability: The updated return must result in a higher tax outgo. You cannot use it to correct an error that would decrease the tax you already paid.
3. Results in a Refund: You cannot file an ITR-U to claim a tax refund.
4. Increases a Refund: You cannot use it to increase the refund amount you claimed in your original return.

Furthermore, you are barred from filing an ITR-U for a particular Assessment Year if:

• A search and seizure operation (a “raid”) has been initiated against you under Section 132.
• A survey has been conducted under Section 133A.
• Any assessment, reassessment, revision, or re-computation is pending or has been completed for that year.
• The Assessing Officer has information about you under specified international agreements (like the Double Taxation Avoidance Agreement – DTAA) or other prescribed acts like the Black Money Act or Benami Transactions Act.

The Price of Correction: Calculating the Additional Tax

Voluntary compliance via ITR-U comes at a cost. You are required to pay the due tax and interest on the additional income, along with an “additional tax.” This additional tax is calculated as a percentage of the aggregate of the extra tax and interest payable. The rate depends on when you file the ITR-U.

The timeline is divided into two slabs:

1. Filed within 12 months: If you file the ITR-U within 12 months from the end of the relevant AY (i.e., between April 1, 2026, and March 31, 2027, for AY 2025-26), the additional tax is 25% of the additional tax and interest.

2. Filed after 12 months but before 24 months: If you file after 12 months but before the 24-month deadline (i.e., between April 1, 2027, and March 31, 2028, for AY 2025-26), the additional tax jumps to 50% of the additional tax and interest.

Let’s illustrate with an example for AY 2025-26:

Suppose Mr. Sharma filed his original return on time but forgot to report a short-term capital gain of ₹2,00,000 from the sale of shares. The tax on this gain (at 15%) would be ₹30,000. He discovers this mistake in May 2026.

• Additional Tax Liability: ₹30,000
• Interest (under Sec 234B/234C): Let’s assume this is ₹2,500.
• Total Tax & Interest Payable: ₹30,000 + ₹2,500 = ₹32,500

Now, let’s calculate the additional tax based on when he files the ITR-U:

• Scenario 1: Files in June 2026 (within 12 months)

  • Additional Tax: 25% of ₹32,500 = ₹8,125
  • Total Amount to be Paid: ₹32,500 + ₹8,125 = ₹40,625

• Scenario 2: Files in June 2027 (after 12 months)

  • Additional Tax: 50% of ₹32,500 = ₹16,250
  • Total Amount to be Paid: ₹32,500 + ₹16,250 = ₹48,750

This example clearly shows that the sooner you correct your mistake, the lower the financial impact.

A Step-by-Step Guide to Filing ITR-U for AY 2025-26

The process of filing ITR-U is entirely online and integrated into the income tax e-filing portal.

1. Login to the Portal: Go to the official Income Tax e-filing portal (incometax.gov.in) and log in using your PAN and password.
2. Navigate to ITR-U: Go to the ‘e-File’ menu > ‘Income Tax Return’ > ‘File Income Tax Return’.
3. Select Assessment Year: Choose AY 2025-26.
4. Select Filing Type: Select the mode of filing as ‘Online’. Crucially, for ‘Type of Return/Audit’, you must select ‘139(8A) – Updated Return’.
5. Choose ITR Form: Select the same ITR form (ITR-1, ITR-2, etc.) that is applicable to you based on your income sources. If you didn’t file before, choose the one that applies now.
6. Complete the ITR Form: The ITR-U form has two main parts:
   • Part A – General Information: Here, you need to provide reasons for updating your return. You will be asked specific questions like “Have you filed a return previously for this assessment year?”. You must select the precise reason from a dropdown menu (e.g., ‘Income not reported correctly’, ‘Return previously not filed’, etc.).
   • Part B – ATI (Computation of Total Updated Income and Tax): This is where you will declare the total income, including the additional income you are now reporting. The portal will automatically compute your tax liability, interest, and the applicable additional tax (25% or 50%).
7. Pay the Tax: This is a critical step. You cannot file ITR-U without first paying the entire tax amount due. After calculating the total payable amount, you must pay it using the portal’s ‘e-Pay Tax’ service (Challan ITNS 280). Once paid, you will receive a Challan Identification Number (CIN) and BSR code.
8. Enter Payment Details: In the ITR-U form, you must enter the details of the tax payment challan.
9. Submit and Verify: Once all details are filled and the tax payment is confirmed, you can preview and submit your ITR-U. The final step is to e-verify it, preferably using Aadhaar OTP, which is the quickest method.

Your updated return is now filed. Remember to download the ITR-V (acknowledgement) for your records.

The Final Word: Embrace Voluntary Compliance

The introduction of ITR-U is a progressive step by the government, shifting the focus from penalisation to voluntary compliance. It acknowledges that genuine mistakes happen and provides a structured, legal pathway to rectify them. While it comes with an additional cost, this cost is often significantly lower than the penalties and legal hassles that can arise from a tax notice or scrutiny assessment.

If you discover a mistake in your tax return for AY 2025-26, don’t panic. Review your situation, check if you are eligible to file an ITR-U, and act promptly. By taking corrective action yourself, you not only ensure your peace of mind but also maintain a clean and compliant financial record.

C.K. Gupta

Hello, I am C.K. Gupta owner of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.