Income-tax March 31 deadline: File ITR-U 2026 to fix FY 2020-21 errors

Taxpayers have a critical deadline approaching; March 31, 2026, is the final date to file an updated Income Tax Return (ITR-U) for FY 2020-21 (AY 2021-22). After this, there will be no option to correct or update your return, even if income was missed or errors were made earlier.

"March 31, 2026, is the last date to file ITR-U for FY 2020-21 (AY 2021-22). Once it passes, you will not be able to file or update your return for this year under any circumstances. Even if you missed reporting income or made an error earlier, there will be no option to correct it after this date. This makes it your final opportunity to take action and close your pending tax matters for FY 2020-21," said Abhishek Soni, CEO & Co-founder, Tax2win.

Who can file ITR-U?

The taxpayers who failed to report income, selected the incorrect head of income, or used the incorrect tax rate have the option of making voluntary corrections on their records.

• Original returns

• Belated returns

• Revised returns

• Missed filing deadlines

• Incorrectly reported income

• The wrong head of income was selected

• Tax paid at the wrong rate

• Adjusting carried forward losses

Refunds not permitted

ITR-U cannot be used to claim or increase refunds, file a nil return, or report a loss.

"The deadline of March 31, 2026, is a critical deadline for taxpayers who either have not reported their income or made mistakes in their earlier filings. This is the final date of submitting the Updated Income Tax Return (ITR-U) on Assessment Year 2021-22 (Financial Year 2020-21)- a window that was increased by two to four years by the Budget 2025," said CA Siddharth Maurya, Founder and Managing Director of Vibhvangal Anukulakara Private Limited.

ITR-U delay may cost up to 200% penalty

There is, however, a price associated with this opportunity. The extra tax will be 25 per cent to 70 per cent of the tax which is due, depending on the delay. Failure to meet such deadline would imply forfeiting the opportunity to go clean on a voluntary basis, to face scrutiny, notification of reassessment under Section 147 and may face penalties of up to 200 per cent of evaded tax. To the individuals who have a previous failure to do, it is the last call to rectify the books before the window shuts forever," explained CA Siddharth Maurya.

Budget 2026 changes

• ITR-U allowed during reassessment: Taxpayers can now file updated returns even after reassessment proceedings start. This attracts an additional 10% tax over existing penalties.

• Loss set-off permitted: Losses can now be adjusted while filing ITR-U, offering greater flexibility in tax calculations.

Form ITR-U is designed to help taxpayers update past returns within 48 months, encouraging compliance while avoiding penalties.