Daijiworld Media Network- New Delhi

New Delhi, May 21: In a major relief for taxpayers seeking to rectify or update their income tax returns, the Income Tax Department has notified a significant change under the updated return scheme, extending the time window for filing ITR-U (Updated Income Tax Return) to four years from the end of the relevant assessment year (AY).

This change follows the provisions introduced in the Finance Act, 2025, which extended the time limit from the earlier 24 months to 48 months, providing a broader opportunity for compliance and correction.

The new structure outlines varying slabs of additional tax depending on how late the updated return is filed:

• Within 12 months from end of relevant AY: 25% additional tax

• Within 24 months: 50% additional tax

• Within 36 months: 60% additional tax

• Within 48 months: 70% additional tax

The ITR-U facility is aimed at encouraging voluntary compliance and offers taxpayers a chance to disclose income that may have been omitted or misreported in earlier returns.

While the extended window brings flexibility, the steep increase in additional tax for delayed filings acts as a deterrent against misuse and encourages prompt corrections.

Tax experts have welcomed the move as a progressive step that aligns with the government’s broader agenda of boosting transparency and voluntary tax compliance, while also enhancing revenue collection.