Proposal to Extend Time Limit for Filing Updated Return (ITR-U) to 60 Months

The Central Government has proposed a significant relief measure for taxpayers through the Taxation and Other Laws (Amendments) Bill, 2026. One of the key proposals is to extend the time limit for filing an Updated Return (ITR-U) from 48 months to 60 months, providing taxpayers with an additional opportunity to voluntarily disclose omitted income and correct genuine mistakes.

What is an Updated Return (ITR-U)?

An Updated Return is a voluntary compliance mechanism that allows taxpayers to rectify omissions or report additional income after filing their original, belated, or revised return. Under the existing provisions of Section 139(8A) of the Income-tax Act, 1961, taxpayers can file only one updated return for a particular assessment year, subject to prescribed conditions and payment of applicable taxes and additional tax. The facility cannot be used to claim a refund, reduce tax liability, or increase losses. The Income-tax Department has also clarified these conditions in its guidance on Updated Returns (ITR-U).

Key Proposal in the Taxation and Other Laws (Amendments) Bill, 2026

The Bill proposes the following important change:

• Increase the time limit for filing an Updated Return (ITR-U) from 48 months to 60 months.

• Provide taxpayers with one additional year to voluntarily disclose missed income or correct genuine omissions.

• Continue the requirement to pay applicable tax, interest, and additional tax while filing the updated return.

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• Encourage voluntary tax compliance and reduce future litigation.

The proposal is intended to provide greater flexibility to taxpayers who discover omissions after the existing four-year period while ensuring that revenue interests are protected through the continued levy of additional tax.

Additional Tax Continues to Apply

The proposed extension does not relax the financial consequences of delayed disclosure. Taxpayers filing an Updated Return will still be required to pay:

• Applicable income tax.

• Interest, wherever applicable.

• Additional income-tax as prescribed under the Income-tax law.

Therefore, while the compliance window is proposed to be extended, filing an Updated Return at the earliest remains advisable to avoid higher costs and ensure timely compliance.

Why This Proposal Matters

The proposed extension is expected to benefit:

• Individuals who later discover unreported income.

• Businesses identifying omissions during internal reviews or tax audits.

• Taxpayers wishing to voluntarily regularise past reporting errors.

• Those seeking to minimise future disputes through voluntary compliance.

An extended filing window also supports the Government's objective of improving voluntary tax compliance while providing taxpayers with additional time to correct genuine mistakes.

Current Status

The extension from 48 months to 60 months is currently a proposal under the Taxation and Other Laws (Amendments) Bill, 2026. It will become effective only after the Bill is enacted and the relevant provisions are notified by the Government. Taxpayers should continue to follow the existing legal provisions until the amendment comes into force.

Conclusion

The proposed extension of the Updated Return (ITR-U) filing period to 60 months is a taxpayer-friendly compliance measure that provides an additional opportunity to voluntarily correct omissions while maintaining the existing additional tax framework. Taxpayers should monitor the progress of the Bill and seek professional advice before filing an Updated Return.

Sources: Taxation and Other Laws (Amendments) Bill, 2026 (introduced in Lok Sabha on 4 August 2026); Section 139(8A) of the Income-tax Act, 1961; Income-tax Department FAQs on Updated Returns (ITR-U). (The Times of India)

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EXCERPT: The Taxation and Other Laws (Amendments) Bill, 2026 proposes extending the ITR-U filing period from 48 to 60 months, subject to continued additional tax provisions.

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