Income Tax: After ITR-1 to ITR-7, CBDT notifies ITR-U. All you need to know about the latest changes

After notifying all income tax forms from ITR-1 to ITR-7, Central Board of Direct Taxes (CBDT) has now notified ITR-U (updated) as well via notification dated May 19, 2025.

To encourage voluntary compliance, the Government of India, via Finance Act 2025, extended the time limit to file the updated return from 24 months to 48 months from the end of the relevant assessment year.

Notably, filing an updated return leads to additional tax payable. From the additional 24 months to 36 months -- additional tax payable is 60 percent of the aggregate of tax and interest payable. And the additional tax payable will be 70 percent of the aggregate of tax and interest during the period of 36 to 48 months.

What is ITR-U?

Those who are not aware, the provision of income tax return (updated) was first introduced in Finance Act 2022 to allow the taxpayers to rectify the errors of omission and commission they may have made while estimating their income for tax payment. That time, the maximum time period that was given for filing an updated return was two years from the end of the relevant assessment year.

Unlike the regular deadline of July 31, the updated return's deadline is March 31. For instance, March 31 2025 was the last date to file updated returns for FY 2021-2022. Read this Livemint article for further details on this.

“Updated return facility was introduced in 2022 for voluntary compliance by taxpayers who had omitted to report their correct income following which nearly 90 lakh taxpayers voluntarily updated their incomes by paying additional tax,” says CA Kinjal Bhuta, secretary, Bombay Chartered Accountants' Society. 

Changes incorporated

First of all, the time limit has been extended from current two to four years per the Finance Bill 2025.

The latest notification also incorporates the following changes aside from extending the time limit from two years to four:

1. Show cause notice: An updated return can not be filed if show cause notice under section 148A has been issued after 36 months from the end of the relevant assessment year. However, later if 148A(3) order is passed saying that it is not a valid case for notice under section 148, then an updated return can be filed within 48 months from the end of relevant assessment year.

2. Additional income tax: As explained above, the updated return entails payment of additional income tax for the extended timelines. As a result, section 140B has been amended accordingly.

3. CBDT notification also highlighted that rule 12AC has also been amended to reflect these changes.

ITR-U not permitted in the following scenarios

There are a number of cases when taxpayers are not permitted to file an updated ITR. These include the following:

I. When after the ITR -U (updated), total income leads to smaller tax liability.

II. When it is being filed to claim tax refund.

III. When a survey has already been conducted, or search has already been initiated against the taxpayer

IV. Additionally, when the tax department has seized taxpayer's documents.

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