An updated return, filed on form ITR-U, lets you declare missed or under-reported income even after the belated and revised return deadlines have passed. The window is now 48 months from the end of the relevant year. The catch: you pay additional tax on top of the normal tax and interest, and the rate rises the later you file.
ITR-U exists to let taxpayers come clean voluntarily before the department finds the gap. You can file it whether or not you filed an original return, but only to increase income and tax — never to claim or enlarge a refund, report a loss, or reduce liability. The additional tax is steep and time-graded: 25% of the tax and interest in the first 12 months, 50% in the second year, then higher slabs of 60% and 70% for the third and fourth years of the extended window.
For an MSME owner the typical use case is an old year where the AIS shows income you never returned — undeclared interest, a property sale, unreported receipts — and a notice has not yet arrived. Filing ITR-U before the department initiates reassessment under sections 279 to 282 usually costs far less than fighting a reopened case with penalties. Compute carefully: tax, interest, late fee if applicable, plus the additional tax, all paid before filing.
Two blocks to know: ITR-U is barred once search or certain proceedings have started for that year, and it cannot be filed for a year where it would lower your declared income. The strategic rule is simple — earlier is exponentially cheaper. If the current year's deadline hasn't passed, file belated or revised instead; ITR-U is the last resort, not the default.
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Reviewed to the law in force in FY 2026-27. General information, not advice — confirm the position for your facts before acting.