Tag: Belated return

Old or New Tax Regime: How and When to Choose It in Your Return (Section 202, Tax Year 2026-27)

Posted on by CA Meet Dhrangadhariya

Last updated: 16 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • The new regime in section 202(1) applies to individuals and HUFs by default. To use the old regime you must exercise an option under section 202(4).
  • A person with no business or professional income exercises the option with the return furnished under section 263(1) for that tax year, so the choice can be made afresh each year.
  • A person with business or professional income must exercise it on or before the due date; once exercised it continues, and it can be withdrawn only once.
  • The option rides on the return filed by the due date; do not assume a belated return can opt out of the new regime.
  • Your employer’s TDS follows the regime you tell it, but the return decides the final regime.

For tax year 2026-27, an individual is taxed under the new regime unless he chooses otherwise. The choice is made in the return, and the rules on how and when depend on whether you have business income. This post sets out section 202 of the Income-tax Act, 2025.

The default and the option

  • Section 202(1) states the slabs of the new regime: nil up to ₹4,00,000, then 5%, 10%, 15%, 20%, 25% and 30% above ₹24,00,000, and it applies to an individual, a HUF, an association of persons (other than a co-operative society), a body of individuals and an artificial juridical person, unless the person exercises the option in section 202(4).
  • Section 202(4) says that section 202(1) does not apply to a person who has exercised an option, in the prescribed manner, for the tax year. That person is taxed under the old slabs, with the old regime deductions and exemptions. Form 125 uses the same words: “opting out of the new tax regime under section 202”.

When to exercise the option (section 202(4))

Your income When and how
No income from business or profession (for example a salaried person, pensioner or investor) Along with the return of income furnished under section 263(1) for the tax year. The option applies to that year, so you can choose again next year
Income from business or profession On or before the due date for furnishing the return under section 263(1). Once exercised it applies to later tax years. It may be withdrawn only once for a tax year other than the year of the first exercise; after that you can never exercise it again, unless you cease to have business or professional income, in which case the option for persons without such income is open

What the new regime does not allow (section 202(2))

If you stay in the new regime, your total income is computed without:

  • Exemptions in Schedule III at serial numbers 5, 6, 7, 8, 11 and 17 (this includes the HRA exemption at serial 11), and serial numbers 12 and 13 other than those prescribed;
  • Professional tax under section 19(1) Table serial 1;
  • Interest under section 22(1)(b) on self-occupied houses (section 21(6));
  • Chapter VIII deductions, except the employer’s contribution to the notified pension scheme (section 124(1) and (2)), section 125(2) and section 146;
  • certain business deductions (sections 33(8), 45(3), 46, 47(1)(a), 48 and 49);
  • set-off of house property loss against other heads, and set-off of carried-forward losses or depreciation attributable to these deductions; and
  • any exemption or deduction for allowances or perquisites provided under any other law.

The standard deduction of ₹75,000 under section 19(1) and the retirement exemptions such as gratuity and leave encashment remain available.

The late return trap

The option is exercised “along with the return of income to be furnished under section 263(1)”. A belated return is furnished under section 263(4). Advisers read this to mean that a person who files after the due date cannot opt out of the new regime for that year. We have not found a ruling or circular that says otherwise, so file on time if you want the old regime.

Your employer and the regime

At the start of the year, tell your employer which regime to use for TDS. You may change your mind before the return; the employer’s deduction is only an estimate. At filing, you choose the regime that gives you the lower tax, on the evidence of your HRA, home loan, section 123 and other claims (Form 124 evidence, Rule 205). Any excess TDS comes back as refund.

How to decide

  1. Add up your actual old regime deductions: standard deduction ₹50,000, HRA exemption, section 123, own NPS, health insurance, home loan interest and others.
  2. Compare with the break-even for your salary in our post on saving tax by salary level. For example, at a salary of ₹20 lakh the old regime needs roughly ₹7.6 lakh of total deductions to match the new regime.
  3. If the old regime is better, exercise the option in the return and file by the due date.
  4. If you have business income, remember that the choice can be changed only once, and plan with a professional.

Frequently asked questions

Which regime applies if I do nothing?

The new regime in section 202(1) applies by default to an individual, HUF, AOP, BOI or artificial juridical person. To be taxed under the old regime you must exercise the option under section 202(4).

When must a salaried person choose the regime?

A person who has no income from business or profession exercises the option along with the return furnished under section 263(1) for that tax year (section 202(4)(b)). The choice is for the tax year, so it can differ from year to year.

What if I have business or professional income?

The option must be exercised on or before the due date for the return. Once exercised it applies to later tax years. It can be withdrawn only once, for a year other than the year it was exercised, and after that you can never opt out of the new regime again, unless you stop having business or professional income, when the salaried-type option becomes available (section 202(4)(a)).

Can I change the regime in a revised return?

The option is tied to the return furnished under section 263(1) for the year. The Act does not say that it can be exercised or changed through a revised or belated return. If you filed on time and made a different choice, take advice before relying on a revised return to change it.

What if I file late?

The section ties the option to the return under section 263(1). A belated return is furnished under section 263(4), so you should assume the new regime applies. Check with a professional before you claim old regime deductions in a belated return.

Does my employer’s choice bind me?

No. The employer deducts TDS on the regime you declare to it, but you decide the final regime when you file the return, and any excess TDS comes back as a refund.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Late, Revised and Updated Income Tax Returns: Time Limits, Fee, Interest and Additional Tax (Tax Year 2026-27)

Posted on by CA Meet Dhrangadhariya

Last updated: 05 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A return missed by the due date can be filed within nine months from the end of the tax year (section 263(4)) with a fee of ₹1,000 if total income is up to ₹5 lakh and ₹5,000 otherwise (section 428), plus interest at 1% a month on tax due (section 423).
  • A return with an error can be revised within 12 months from the end of the tax year (section 263(5), as amended by the Finance Act, 2026); the same fee applies if the revised return is filed after nine months.
  • An updated return (ITR-UN) can be filed up to 48 months after the end of the financial year following the tax year, with additional tax of 25%, 50%, 60% or 70% of tax and interest (section 267).
  • An updated return cannot reduce tax, create or increase a refund, or be a loss return, with limited exceptions.

Missing the due date, finding an error or realising later that you left out income does not close the door on you. The Income-tax Act, 2025 gives three ways to file again, each with its own time limit and cost. This post uses the section numbers of the 2025 Act, which applies to tax year 2026-27 (income of FY 2026-27).

At a glance

Return Section Last date for tax year 2026-27 Cost
Original return 263(1) 31 July 2027 (other dates for audit and business cases) None
Belated return 263(4) 31 December 2027 (nine months from the end of the tax year) Fee under section 428 and interest under section 423
Revised return 263(5) 31 March 2028 (12 months from the end of the tax year) Fee under section 428(b) if filed after nine months
Updated return 263(6) 31 March 2032 (48 months from the end of the financial year following the tax year) Additional tax of 25% to 70% (section 267)

In each case the deadline is the earlier of that date and the completion of the assessment, except for the updated return.

1. Belated return (section 263(4))

If you did not file on or before the due date, you can file within nine months from the end of the tax year, or before the assessment is completed, whichever is earlier.

Fee (section 428(a)):

Total income Fee
Up to ₹5,00,000 ₹1,000
More than ₹5,00,000 ₹5,000

Interest (section 423): simple interest at 1% a month on the unpaid tax, from the day after the due date to the date of filing, where unpaid tax means tax on total income less advance tax, TDS and TCS paid. The interest is computed as I = 1% × A × T, where A is that tax and T is the number of months in the period.

Example. Total income ₹8,00,000 in tax year 2026-27; tax after TDS and advance tax is ₹50,000. You file on 31/10/2027, three months after the 31/07/2027 due date.

  • Fee: ₹5,000
  • Interest: 1% × 50,000 × 3 = ₹1,500
  • Pay the tax, the interest and the fee before you file; the return is not complete without them.

Consequences of a belated return: you may lose the right to carry forward a business or capital loss, because a loss must be determined in a return filed under section 263(1) (section 121). Some deductions and claims also need the return to be on time. Check each claim.

2. Revised return (section 263(5))

If you filed a return under section 263(1) or (4) and find an omission or a wrong statement, you can file a revised return within 12 months from the end of the tax year, or before the assessment is completed, whichever is earlier. The Finance Act, 2026 extended this period from nine to twelve months with effect from 01/04/2026.

If the revised return is furnished after nine months from the end of the tax year, you pay the fee in section 428(b): ₹1,000 if total income is up to ₹5,00,000 and ₹5,000 otherwise.

A revised return replaces the original. Use it for corrections such as TDS credit missed, a wrong deduction or income left out, if the time is open.

3. Updated return (section 263(6) and Rule 165)

An updated return can be filed by any person, whether or not he filed an earlier return, at any time within 48 months from the end of the financial year succeeding the tax year. It is meant to disclose additional income, and the return is in Form ITR-UN (Rule 165).

Additional tax (section 267(5)): on the aggregate of tax and interest payable on the updated return, including surcharge and cess:

When filed Additional tax
After the belated and revised return windows have expired, and within 12 months from the end of the financial year succeeding the tax year 25%
In the next 12 months 50%
In the third 12 months 60%
In the fourth 12 months, up to 48 months 70%

If the updated return is filed in response to a notice under section 280 within the time in the notice, a further 10% of tax and interest is payable.

You pay the tax, interest, fee and additional tax before filing, and attach proof of payment (section 267(3)).

When an updated return is not allowed (section 263(6)(c) and (d))

  • It is a return of loss, except where you had filed a loss return on time and the updated return is a return of income or reduces the loss.
  • It reduces the total tax liability from the earlier return.
  • It creates or increases a refund.
  • An updated return was already filed for the year.
  • An assessment, reassessment, recomputation or revision is pending or completed for the year (unless it is filed in response to a notice under section 280).
  • The Assessing Officer has information about a violation of specified laws, or information has been received under a tax treaty, and has been communicated to you before you file.
  • Prosecution proceedings have been started for the year.
  • Thirty-six months have expired from the end of the financial year following the tax year and a show-cause notice under section 281 has been issued.
  • A search, requisition or survey has been conducted, for the year of the search and earlier years.
  • A class of persons notified by the Board.

If a loss or credit carried forward is reduced by the updated return, an updated return must be filed for each later year that is affected.

Which to choose

  1. Missed the due date and no income was left out: file the belated return as soon as possible, so the fee and interest are smaller.
  2. Filed on time but made a mistake: file a revised return within 12 months.
  3. Left out income and the revised window has closed: file an updated return; the additional tax rises with delay.
  4. Left out income and you got a notice: respond as the notice says; the updated return route in response to a notice carries an extra 10%.

For FY 2025-26 (assessment year 2026-27)

Income of FY 2025-26 is still under the 1961 Act, with the Finance Act, 2026 amendments from 01/03/2026. The same ideas apply there under sections 139(4), 139(5) and 139(8A) of that Act, with fee under section 234F and interest under section 234A. The belated return for that year can be filed up to 31 December 2026 and the revised return until the end of the assessment year, 31 March 2027. Check your forms and the portal for the dates that apply to your return.

Frequently asked questions

What is the last date to file a belated return?

Within nine months from the end of the tax year, or before the assessment is completed, whichever is earlier (section 263(4)). For tax year 2026-27 that is 31 December 2027.

What is the fee for filing late?

₹1,000 if total income does not exceed ₹5,00,000, and ₹5,000 in any other case (section 428), plus interest under section 423 at 1% a month on the unpaid tax.

How long can I revise a return?

Within 12 months from the end of the tax year, or before the assessment is completed, whichever is earlier (section 263(5)). If you file the revised return after nine months from the end of the tax year, the same fee of ₹1,000 or ₹5,000 applies.

What is an updated return?

A return you can file at any time within 48 months from the end of the financial year following the tax year, whether or not you filed an earlier return, to report income you missed. It carries additional tax and is filed in Form ITR-UN (Rule 165).

How much is the additional tax on an updated return?

25% of tax plus interest if filed after the revised return window but within 12 months from the end of the financial year following the tax year; 50% in the second year, 60% in the third and 70% in the fourth. If filed in response to a notice, a further 10% (section 267(5)).

When is an updated return not allowed?

If it is a return of loss (with a limited exception), reduces tax, creates or increases a refund, was already filed once for the year, assessment or reassessment is pending or completed (with a notice-related exception), or in certain cases of search, survey, prosecution or information received (section 263(6)(c) and (d)).

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.