FAQs on amendment proposed in Updated return provisions u/s 263(6) of Income Tax Act 2025

FAQs on amendment proposed in Updated return provisions under section 263(6) of Income Tax Act 2025 by Budget 2026-27

Income Tax Department has issued a FAQ on amendments proposed for updated return provisions under section 263(6) of Income Tax Act 2025

Q.1 What is an “Updated Return” under the Income-tax Act, 2025?

Ans: Section 263(6) of the Income-tax Act, 2025 provides for furnishing of an updated return of income. An updated return is a return that may be furnished by a person, whether or not a Original, revised, or belated return has been earlier furnished, to voluntarily disclose any income that was not reported or was inaccurately reported before, as long as certain conditions specified in the Income-tax Act, 2025 are met.

Q.2 Who can furnish an Updated Return and within what time limit?

Ans: Any person may furnish an updated return of income or income of any other person for whom he is assessable, within forty-eight months from the end of the financial year succeeding the relevant tax year, as provided under section 263(6)(a) of the Income-tax Act, 2025. Such return may be furnished even if no original, belated or revised return was filed earlier, subject to the exclusions specified in section 263 of the Income-tax Act, 2025.

Q.3 What additional tax is payable while furnishing an Updated Return?

Ans: In addition to tax and interest payable under the Act, an assessee furnishing an updated return is required to pay additional income-tax on additional income disclosed in the updated ITR when compared with the corresponding income in original, revised or belated ITR at the following rates:

• 25% of aggregate tax and interest, if the updated return is furnished after the due date of filing the revised ITR and within 12 months of the end of the financial year following the corresponding tax year;

• 50%, if furnished after 12 months but before 24 months of the period indicated above;

• 60%, if furnished after 24 months but before 36 months of the period indicated above;

• 70%, if furnished after 36 months but before 48 months of the period indicated above,

Q.4 What are the provisions relating to updation of income in respect of the updated return?

Ans: Section 263(6)(b) of the Income-tax Act, 2025 provides that taxpayers may file the updated return in such cases where original return filed under section 263(1) of the Income-tax Act, 2025 shows a loss, and updated return being filed thereafter, shows income. However, section 263(6)(c)(i) of the Income-tax Act, 2025 restricts filing of updated return when the updated return is a return of loss for the said tax year. Therefore, presently the updated ITR cannot be filed if the earlier ITR is a return of loss and the loss is proposed to be reduced through filing of updated ITR. 

Q.5 What are the proposed changes in the budget, 2026 in respect of the scope of filing of the updated return?

Ans: An amendment is proposed in Section 263 of the Income-tax Act, 2025  to allow taxpayers to file an updated return in cases where they reduce the amount of loss compared to the loss claimed in the original return filed by the specified due date.

Q.6 What are the proposed changes in the budget, 2026 for filing the updated return in response of notice of reassessment issued under section 280 of the Income-tax Act, 2025?

Ans: Section 263(6)(c)(v) of the Income-tax Act, 2025 prohibits filing of an updated return in cases where any proceedings for assessment, reassessment, recomputation, or revision of income are pending or have been completed for the tax year in question. In this regard, amendment is proposed so as to allow filing of an updated return also in such cases where reassessment proceeding have been initiated for the relevant tax year in pursuance of a notice issued under section 280 of the Income-tax Act, 2025. Such updated return is required to be filed within such period as specified in the said notice. Consequent to filing such return, no penalty shall be imposed in respect of income reported in such updated ITR

Q.7 What is the additional amount to be paid in the case of updated return filed in response of notice issued under section 280 of the Income-tax Act, 2025? 

Ans: Where an updated return is filed in pursuance of a notice issued under section 280, the additional income-tax payable shall be increased by a further sum of 10 % of the aggregate of tax and interest payable. i.e. total additional income-tax shall be:  

• 35% (25% + 10%) of aggregate of tax and interest, if the updated return is furnished within 12 months;

• 60% (50% + 10%) if furnished after 12 months but before 24 months;

• 70% (60% + 10%) if furnished after 24 months but before 36 months;

• 80% (70% + 10%) if furnished after 36 months but before 48 months, from the end of the financial year succeeding the relevant tax year.

Q.8 Whether reassessment proceedings be abated upon filing of an updated return?

Ans: No. The reassessment proceedings will not be abated upon filing of updated return. However, no penalty of under-reporting or misreporting of income will be imposed on such income which have been disclosed in the updated return filed in response of notice issued under section 280 of the Income-tax Act, 2025.

Q.9 When can someone file the updated return for reducing the loss and updated return in response of notice of reassessment issued under section 280 of the Income-tax Act, 2025?

Ans: The updated return in these cases may be filed after the enactment of the Finance Act, 2026.

Q.10 Will there be a requirement to make any payment or any fee?

Ans: There is no fee prescribed for filing of update return. Thus, no additional fee is required to be made for filing of updated return in the case of expanded scope.

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