ITR-U Time Limit: 48 Months Remains the Current Position

Taxpayers who discover omitted income or errors after the regular income-tax return deadlines may use the Updated Return facility, commonly known as ITR-U, subject to statutory conditions. While reports have referred to a proposed extension of the filing window from 48 months to 60 months, the current legal position requires careful attention.

Current Position on ITR-U

Under Section 263(6) of the Income-tax Act, 2025, an eligible taxpayer may furnish an Updated Return within 48 months from the end of the financial year succeeding the relevant tax year, subject to the conditions and exclusions prescribed under the Act. The CBDT's Budget 2026 FAQs expressly confirm the 48-month period.

The earlier framework under the Income-tax Act, 1961 was also expanded to a maximum period of 48 months by the Finance Act, 2025. CBDT subsequently notified the updated ITR-U form through Notification No. 49/2025 dated 19 May 2025.

Additional Tax Continues to Apply

Filing an Updated Return is not a tax-free correction mechanism. In addition to the applicable tax and interest, additional income-tax is payable based on the period when the updated return is furnished:

• 25% of aggregate tax and interest for the first applicable 12-month period.

• 50% where the return is furnished after 12 months but before 24 months.

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• 60% where it is furnished after 24 months but before 36 months.

• 70% where it is furnished after 36 months but within 48 months.

The CBDT has confirmed these rates in its Budget 2026 FAQs.

What Did the 2026 Tax Proposal Change?

The 2026 Budget proposed changes to the Updated Return mechanism, but these were primarily aimed at widening its scope rather than extending the standard filing window to 60 months. The proposals included allowing an updated return in specified cases involving reduction of losses and permitting an updated return in certain reassessment situations, subject to prescribed conditions and an additional tax burden.

It is therefore important not to treat the reported 60-month extension as an enacted amendment under the Taxation and Other Laws (Amendment) Act, 2026. That Act received Presidential assent on 17 August 2026 and became Act No. 21 of 2026, but its principal amendments concern the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007; the enacted legislation does not establish a general 60-month ITR-U filing window.

Practical Takeaway for Taxpayers

Taxpayers should not postpone voluntary disclosure on the assumption that a five-year ITR-U window is presently available. Before filing an Updated Return, it is advisable to:

• Review the relevant tax year and applicable filing period.

• Identify omitted income, incorrect disclosures or other eligible adjustments.

• Check whether the statutory conditions for an Updated Return are satisfied.

• Calculate the applicable tax, interest and additional income-tax.

• Review the return carefully before submission, particularly where significant income or complex transactions are involved.

Conclusion

The Updated Return mechanism continues to provide an important avenue for voluntary tax compliance. However, as of the current legislative position, the general ITR-U filing period remains 48 months; the reported proposal to increase it to 60 months should not be presented as an enacted change under the Taxation and Other Laws (Amendment) Act, 2026. Taxpayers should rely on the applicable statutory provisions and CBDT guidance when determining their eligibility and filing timeline.

For expert guidance on this topic, contact your tax professional today.