Last reviewed: 25 September 2026. Missed reporting some income in an earlier year, or never filed at all? The updated return, ITR-U, lets you set it right - and the window is now four years from the end of the assessment year. The Finance Act, 2026 has also opened a route to file it after a reassessment notice. Here is how ITR-U works, what it costs in extra tax, and who can and cannot use it. Updated returns for AY 2026-27 and earlier years are filed under Section 139(8A) of the Income-tax Act, 1961, with additional tax under Section 140B; for tax year 2026-27 onward the same provision is section 263(6) of the Income-tax Act, 2025, with additional tax under section 267.
Quick summary
The cost rises the longer you wait
| Filed within (from end of AY) | Additional tax on tax + interest | If filed after a section 148 notice |
|---|---|---|
| 12 months | 25% | 35% |
| 24 months | 50% | 60% |
| 36 months | 60% | 70% |
| 48 months | 70% | 80% |
So the return for FY 2023-24 (AY 2024-25) can now be updated up to 31 March 2029 - but the extra cost climbs from 25% to 70% the longer you leave it. "Tax" for this purpose includes surcharge and cess.
Worked example: missed interest income
A salaried taxpayer in the 30% slab filed his FY 2024-25 return on time but left out Rs 3 lakh of fixed-deposit interest that later showed up in his AIS. AY 2025-26 ended on 31 March 2026, so an updated return filed by 31 March 2027 falls in the first 12-month band.
| Item | Amount |
|---|---|
| Tax on Rs 3 lakh at 30% plus 4% cess | Rs 93,600 |
| Less TDS already deducted by the bank at 10% | Rs 30,000 |
| Net tax payable | Rs 63,600 |
| Interest under Sections 234A/234B (illustrative, to September 2026) | about Rs 11,000 |
| Tax plus interest | about Rs 74,600 |
| Additional tax at 25% (filed by 31 March 2027) | about Rs 18,650 |
| Total outgo if filed now | about Rs 93,250 |
| Additional tax if left until the fourth year (70%) | about Rs 52,200, plus more interest |
| Additional tax if filed after a section 148 notice in the first year (35%) | about Rs 26,100 |
Interest depends on the exact months and on advance-tax position, so compute it on the actual dates before paying. The pattern holds whatever the numbers: filing early costs a fraction of waiting, and waiting for a notice costs more again.
What ITR-U can and cannot do
- Can: report income you missed or under-reported, even if you never filed the original return - as long as it results in additional tax.
- Can (from 1 March 2026): be filed in response to a reassessment notice under section 148, within the time given in the notice, at the higher rate. Income disclosed this way is not used as the basis for penalty under section 270A.
- Cannot: be used to claim or increase a refund, reduce your tax, or increase a loss. Where an updated return reduces a loss or credit carried to later years, updated returns are needed for those later years too.
When ITR-U is blocked
| Situation | Why it is blocked |
|---|---|
| Search, requisition or survey for that year (other than a TDS/TCS survey) | The department has already started its own inquiry |
| Assessment or reassessment pending or completed for that year | The year is already before the assessing officer |
| Information received under the PMLA, Black Money Act, Benami Act, SAFEMA or a tax treaty | The disclosure would no longer be voluntary |
| Prosecution started for that year | Proceedings have gone beyond civil correction |
| A show-cause notice under section 148A issued after 36 months from the end of the AY | Unless the officer later decides it is not a fit case for reassessment |
| An updated return already filed for that year | Only one updated return is allowed per year |
How to file
- Reconcile AIS and Form 26AS for the year and work out the income left out.
- Check the year is not blocked and which time band you are in.
- Compute tax, interest and the additional tax, and pay it as self-assessment tax before filing.
- File ITR-U on the e-filing portal with the challan details, and verify it (a digital signature is required for companies and audited taxpayers).
Returning NRIs and foreign assets
A common use of ITR-U is by returning NRIs who became resident and did not report foreign bank accounts, shares or income, or who missed foreign income in a year when they were resident. The updated return should be filed with Schedule FA completed, but it is not available once the department has received information about the asset under the Black Money Act or a treaty exchange, so timing matters. Our CA services for NRIs cover these disclosures.
Why use it proactively
Filing ITR-U voluntarily is far better than waiting for a notice - it lets you regularise the position on your own terms, and the sooner you do it within the window, the lower the additional tax.
Frequently asked questions
What is ITR-U?
ITR-U is an updated income tax return under Section 139(8A) of the Income-tax Act, 1961 (section 263(6) of the Income-tax Act, 2025 for tax year 2026-27 onward) that lets you correct a missed or under-reported return for an earlier year, by paying the tax plus an additional amount.
How far back can I file ITR-U now?
The window has been extended to 48 months (4 years) from the end of the relevant assessment year, under the Finance Act, 2025 - up from the earlier 24 months.
How much extra tax does ITR-U cost?
An additional amount on the tax and interest: 25% if filed within 12 months of the end of the AY, 50% within 24 months, 60% within 36 months and 70% within 48 months. If the updated return is filed in response to a reassessment notice under section 148, a further 10% is added.
Can I use ITR-U to claim or increase a refund?
No. ITR-U cannot be used to claim a refund, increase a refund, reduce your tax, or increase a loss - it is only for paying additional tax on missed or under-reported income.
Can I file ITR-U if I never filed the original return?
Yes. You can file ITR-U even if you missed filing the original return altogether, as long as it results in additional tax and you are within the time window.
When can I not file ITR-U?
You generally cannot file it where a search, requisition or survey has been initiated, where assessment or reassessment is pending or completed for that year, where the department already holds information under laws such as the Black Money Act or a tax treaty, where prosecution has started, or where it would reduce tax or increase a refund or loss.
Can I file ITR-U after receiving a reassessment notice?
Yes. From 1 March 2026, the Finance Act, 2026 allows an updated return to be filed in pursuance of a notice under section 148, within the time specified in that notice. The additional tax is increased by a further 10% (so 35%, 60%, 70% or 80%), but the income disclosed in it is not used as the basis for penalty under section 270A.
I am a returning NRI and forgot to report foreign assets. Can ITR-U help?
Often, yes, if the omission led to additional tax and the department has not already received information about it under the Black Money Act or a treaty exchange. A resident who fails to report foreign assets also faces Black Money Act exposure, so the updated return should be filed with Schedule FA completed and the income correctly taxed, after advice on the facts.
We check whether ITR-U applies, compute the additional tax and file the updated return correctly.
Income Tax FilingNotice ManagementTalk to CA Somesh Chandak & Associates - we are happy to help.
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