Taxpayers who need to rectify errors or declare previously unreported income for Financial Year 2020-21 (Assessment Year 2021-22) have a crucial deadline approaching: March 31, 2026. This is the last date to file an updated income tax return (ITR-U) under Section 139(8A) of the Income-tax Act.

The provision for filing an updated ITR was introduced to allow taxpayers to correct omissions or errors in their original returns. While initially, the time limit was two years, it was extended to four years from the end of the relevant assessment year, effective from April 2025 (as announced in Budget 2025).

Why File an ITR-U?

Filing an ITR-U is a prudent step if you have:

• Missed reporting any income.
• Failed to file an ITR.
• Applied an incorrect rate of tax.

By filing an ITR-U and paying the additional tax now, taxpayers can avoid potentially much higher penalties that the Income Tax Department could impose if such discrepancies are discovered later. The additional tax payable for filing an ITR-U varies depending on the time elapsed since the assessment year.

For FY 2020-21 (AY 2021-22), the window to file an updated return closes on March 31, 2026. Therefore, taxpayers are urged to review their financial records and take necessary action promptly.