Budget 2025 extends the window for filing updated ITRs to 48 months with increased penalties

60%, 70% penal income tax payable when filing updated income tax return in 3rd, 4th year from end of AY: Budget 2025 Additional taxes of 60% apply if filed after 24 months, and 70% if filed after 36 months from the assessment year end. This aims to report omitted incomes while imposing higher penalties for delayed submissions

While Budget 2025 has extended the time limit for filing updated ITR, the penal tax payable on the additional income declared in the ITR has been pegged at 60% and 70% for updated ITRs filed in the 3rd and 4th year from the end of the assessment year. Till now, updated ITR could only be filed within two years from the end of the assessment year.

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Finance Minister Nirmala Sitharaman has proposed an extension of the current 24-month period for filing an amended return to 48 months (4 years) from the end of the relevant assessment year in order to further promote voluntary tax compliance.

Deadline to file updated tax return extended in Budget 2025

While the government has provided a longer window to file updated tax returns to report incomes not disclosed earlier, this comes with payment of higher amounts of additional (penal) taxes on this undisclosed income.

A taxpayer is required to pay 25% of additional tax (penal tax) on aggregate of tax and interest payable if the updated ITR is filed within 12 months from the end of the assessment year. This additional tax (penal) rate is 50% if the updated ITR is furnished after 12 months but before 24 months from the end of the assessment year

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Now, a taxpayer would be required to pay 60% as additional/penal tax if the updated ITR is furnished after 2 years but before 3 years from the end of the relevant assessment year. This rate would increase to 70% if the updated ITR is furnished after 3 years.

This story originally appeared on: India Times - Author:Faqs of Insurances