Deadline to file updated tax return extended in Budget 2025
Feb 1, 2025
Synopsis
Finance Minister Nirmala Sitharaman proposed to extend the time limit for filing updated tax returns from 24 months to 48 months in the Union Budget 2025.
Finance Minister Nirmala Sitharaman in her budget 2025 speech said that to further encourage voluntary tax compliance, it is proposed to extend the time limit for filing an updated return from the existing 24 months to 48 months from the end of the relevant assessment year.
This means that the time limit is proposed to be extended from the current two years to four years.
These amendments will take effect from April 1, 2025.
Current rules for updated return
According to the Budget Memorandum, “Sub-section (8A) of section 139 of the Act, relates to furnishing of updated return. As per the present provisions, an updated return can be filed upto 24 months from the end of the relevant assessment year. The facility of updated return has promoted voluntary compliance against payment of additional income-tax of 25% of aggregate of tax and interest payable for updated return filed upto 12 months from the end of the relevant assessment year. For updated returns filed after expiry of 12 months and upto 24 months from the end of the relevant assessment year, the additional income-tax of 50% of aggregate of tax and interest is to be paid.”
What is proposed in the Union Budget 2025?
As per the Budget Memorandum, “With a view to further nudging voluntary compliance, it is proposed to amend the said subsection so as to extend the time-limit to file the updated return from existing 24 months to 48 months from the end of relevant assessment year. Rate of additional income-tax payable for updated return filed after expiry of 24 months and upto 36 months from the end of the relevant assessment year shall be 60% of aggregate of tax and interest payable. The additional income-tax payable for updated return filed after expiry of 36 months and upto 48 months from the end of the relevant assessment year shall be 70% of aggregate of tax and interest payable.”
"It is further proposed to provide that no updated return shall be furnished by any person where any notice to show-cause under section 148A of the Act has been issued in his case after thirty-six months from the end of the relevant assessment year. However, where subsequently an order is passed under sub-section (3) of section 148A of the Act determining that it is not a fit case to issue notice under section 148 of the Act, updated return may be filed upto 48 months from the end of the relevant assessment year."
[The Economic Times]
