Section 267 Income Tax Act 2025: How Much Tax Is Payable on an Updated Return?
An updated income-tax return (ITR-U) can correct qualifying omissions or underreported income, but Section 267 requires payment of the outstanding tax, applicable interest and fee, and additional income-tax before filing. The amount of additional tax depends on when the return is filed and whether it follows a qualifying reassessment notice.
What is tax on an updated income-tax return?
An updated return is a return permitted under Section 263(6), subject to statutory restrictions. It is different from a revised return: an updated return generally involves additional tax compliance and cannot ordinarily be used merely to reduce the taxpayer's liability or increase a refund. Section 267 provides the method for computing and paying amounts due on an updated return.
Section 267 explained subsection by subsection
Section 267(1): No earlier original or belated return
If an assessee did not furnish a return under Section 263(1) or 263(4), the tax payable on the proposed updated return must be determined after eligible adjustments. The taxpayer must pay the balance tax, applicable interest and fee, plus additional income-tax under subsection (5), before filing, and furnish proof of payment.
Section 267(2): Allowable tax credits and reliefs
The computation under subsection (1) considers advance tax already paid, eligible TDS/TCS, relief under Section 157, specified foreign-tax relief under Sections 159 and 160, and eligible credits under Section 206. Following the Finance Act, 2026, clause (f) refers to Section 206(2)(e) to (h) and Section 206(3) and (4). Credits must meet their own conditions.
Section 267(3): Earlier return already filed
Where an original, belated or revised return was furnished, Section 267(3) requires the additional liability to be determined in light of the earlier return, applicable credits, and any refund already issued. Tax, applicable interest and fee, and additional income-tax must be paid before furnishing the updated return, subject to the statutory adjustment for interest already paid.
Section 267(4): Adjustments for earlier-return cases
Subsection (4) identifies the tax and relief already taken into account and additional eligible TDS/TCS, foreign-tax relief and Section 206 credits attributable to income not included in the earlier return. This prevents the same tax credit being claimed twice and helps determine the incremental liability.
Section 267(5): Additional income-tax rates and reassessment notice
Subsection (5)(i) applies additional income-tax at 25%, 50%, 60% or 70% of the relevant aggregate of tax and interest payable, depending on the filing window. Under subsection (5)(ii), inserted by the Finance Act, 2026, an updated return furnished pursuant to a notice under Section 280 within the period stated in that notice attracts a further 10% of that aggregate, in addition to the applicable rate.
Section 267(6): Surcharge and cess included
For computing additional income-tax, the expression tax includes applicable surcharge and cess. The statutory calculation is therefore not limited to basic income-tax.
Section 267(7): Special calculation of advance-tax interest
For a taxpayer who filed an earlier return, interest under Section 424 is computed using the specially defined assessed tax in subsection (7), after prescribed credits and adjustments, including an adjustment for any refund issued on the earlier return. The computation should be checked against the exact statutory wording.
Section 267(8): CBDT guidelines
The Central Board of Direct Taxes may, with the previous approval of the Central Government and by notification, issue guidelines to remove difficulties in implementing Section 267.
What are the additional income-tax rates for an updated return?
The statutory filing windows are measured from the end of the financial year succeeding the relevant tax year. The first window also begins only after the applicable belated or revised-return filing period has expired.
| Filing window | Normal additional tax | Where Section 280 notice rule applies |
|---|---|---|
| After the relevant belated/revised-return deadline, within 12 months | 25% | 35% |
| After 12 months, within 24 months | 50% | 60% |
| After 24 months, within 36 months | 60% | 70% |
| After 36 months, within 48 months | 70% | 80% |
These percentages apply to the statutory aggregate of tax and interest payable, not simply to the gross income disclosed. The Section 280 column applies only where the updated return is validly filed in pursuance of the notice within its specified period.
Example: How is additional tax calculated?
Assume the eligible tax balance on an updated return is Rs. 40,000 and the relevant interest is Rs. 8,000. The aggregate for the illustration is Rs. 48,000. Assume no other fee or adjustment for simplicity.
| Item | Amount (Rs.) |
|---|---|
| Additional tax at 25% | 12,000 |
| Total tax plus interest plus additional tax | 60,000 |
| Additional tax at 35% if the qualifying Section 280 notice rule applies | 16,800 |
| Total in qualifying Section 280 case | 64,800 |
This is a simplified numerical illustration, not a calculation for any particular tax year. Actual interest, credits, refunds, surcharge, cess, and other liabilities must be computed under the applicable provisions.
Relevant statutory terms
Corresponding provision under the Income-tax Act, 1961
Section 267 of the 2025 Act broadly corresponds to Section 140B of the Income-tax Act, 1961, concerning tax on updated returns. The numbering and applicable transitional provisions must be checked for returns governed by the former Act.
Frequently asked questions
How much additional tax is payable on an updated ITR?
The normal additional income-tax rates are 25%, 50%, 60% and 70% of the applicable tax-and-interest aggregate, depending on the filing period. A qualifying Section 280 notice adds another 10 percentage points.
Can an updated return be filed after four years?
Section 263(6) generally allows an updated return within 48 months from the end of the financial year succeeding the relevant tax year, subject to statutory conditions. Filing outside that period is not covered by this permission.
Is additional tax calculated only on the extra income?
No. Section 267 uses the relevant tax and interest payable as determined under its computation rules, rather than simply applying the percentage to the additional income.
Must payment be made before submitting the updated return?
Yes. The applicable tax, additional income-tax, interest and fee must be paid before filing, with proof of payment accompanying the return as required.
Can an updated return be filed after a Section 280 notice?
In the circumstances permitted by Section 263(6), as amended in 2026, an updated return may be filed within the notice period. Section 267(5)(ii) then increases the additional tax by a further 10% of the relevant aggregate.
Does filing an updated return automatically stop reassessment?
No. Filing an updated return pursuant to a qualifying notice does not, by itself, terminate reassessment proceedings. The specific statutory consequences must be considered.
Official legislation and resources
See the official Income-tax Act, 2025 as amended by the Finance Act, 2026, the Income Tax Department's Section 267 page, and the official return-filing guidance.
Updated: 11 November 2026. This article provides general statutory information; the applicable return, tax year and notified rules must be verified for individual cases.