Chapter XV - Return of Income
Section 267
Section 267: tax on updated return
Section 267 is the pricing mechanism behind the updated return introduced in Section 263(6): filing an updated return requires ordinary tax, applicable interest and fee, plus escalating additional income-tax that increases the longer you wait.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where no return of income under section 263(1) or (4) has been furnished by an assessee and, after taking into account the amounts referred to in sub-section (2), tax is payable on the basis of return to be furnished by such assessee under section 263(6), then— (a) the assessee shall be liable to pay such tax together with interest and fee payable under any of the provisions of this Act for any delay in furnishing the return or any default or delay in payment of advance tax; (b) such tax, interest and fee shall be payable along with the payment of additional income-tax computed as per sub-section (5), before furnishing the return; and (c) the return shall be accompanied by proof of payment of such tax, additional income-tax, interest and fee.
(2) The amounts referred to in sub-section (1) shall be,— (a) the amount of tax, if any, already paid as advance tax; (b) any tax deducted or collected at source; (c) any relief of tax claimed under section 157; (d) any relief of tax or deduction of tax claimed under section 159(1) or 160 on account of tax paid in a country outside India; (e) any relief of tax claimed under section 159(2) on account of tax paid in any specified territory outside India referred to in that section; and (f) any tax credit claimed to be set off as per the provisions of section 206(2) (e) to (h) and 206(3) and (4).
(3) Where, return of income under section 263(1) or (4) or (5) (referred to as earlier return) has been furnished by an assessee and, after taking into account the amounts referred to in sub-section (4) [as increased by the amount of refund, if any, issued in respect of such earlier return], tax is payable on the basis of return to be furnished by such assessee under section 263(6) then— (a) the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any default or delay in payment of advance tax; (b) such tax, interest and fee shall be payable along with the payment of additional income-tax, as computed as per sub-section (5), as reduced by the amount of interest paid under the provisions of this Act in the earlier return, before furnishing the return; and (c) the return shall be accompanied by proof of payment of such tax, additional income-tax, interest and fee.
(4) The amounts referred to in sub-section (3) shall be the following,— (a) the amount of relief or tax referred to in section 266(1), the credit for which has been taken in the earlier return; (b) tax deducted or collected at source, as per the provisions of Chapter XIX-B, on any income which is subject to such deduction or collection and which is taken into account in computing total income and which has not been included in the earlier return; (c) any relief of tax or deduction of tax claimed under section 159(1) or 160 on account of tax paid in a country outside India on such income which has not been included in the earlier return; (d) any relief of tax claimed under section 159(2) on account of tax paid in any specified territory outside India referred to in that section on such income which has not been included in the earlier return; and (e) any tax credit claimed, to be set off as per the provisions of section 206(2) (e) to (h) and 206(3) and (4) which has not been claimed in the earlier return.
(5)(i) For the purposes of sub-sections (1) and (3), the additional income-tax payable at the time of furnishing the return under section 263(6) shall be equal to, — (a) 25% of aggregate of tax and interest payable, as determined in sub-section (1) or (3), as the case may be, if such return is furnished after the expiry of the time available under section 263(4) or (5) and before completion of twelve months from the end of the financial year succeeding the relevant tax year; or (b) 50% of aggregate of tax and interest payable, as determined in sub-section (1) or (3), as the case may be, if such return is furnished after the expiry of twelve months but before completion of twenty-four months from the end of the financial year succeeding the relevant tax year; or (c) 60% of aggregate of tax and interest payable, as determined in sub-section (1) or (3), as the case may be, if such return is furnished after the expiry of twenty-four months, but before the completion of thirty-six months, from the end of the financial year succeeding the relevant tax year; or (d) 70% of aggregate of tax and interest payable, as determined in sub-section (1) or (3), as the case may be, if such return is furnished after the expiry of thirty-six months, but before the completion of forty-eight months, from the end of the financial year succeeding the relevant tax year. (ii) Where an updated return is filed in pursuance of a notice issued under section 280 within the period specified in the said notice, the additional income-tax payable under sub-section (5)(i) shall be increased by a further sum of 10% of the aggregate of tax and interest payable, as determined in sub-section (1) or (3), as the case may be.
(6) For the purposes of computation of “additional income-tax” under this section, tax shall include surcharge and cess, by whatever name called, on such tax.
(7) Irrespective of anything contained in section 424(2), for the purposes of sub-section (3), interest payable under section 424 shall be computed on an amount equal to the assessed tax where, “assessed tax” means the tax on the total income as declared in the return to be furnished under section 263(6),— (a) after taking into account,— (i) the amount of relief or tax referred to in section 266(1), the credit for which has been claimed in the earlier return, if any; (ii) tax deducted or collected at source, as per the provisions of Chapter XIX-B, on any income which is subject to such deduction or collection and which is taken into account in computing such total income, which has not been included in the earlier return; (iii) any relief of tax or deduction of tax claimed under section 159(1) or 160 on account of tax paid in a country outside India on such income which has not been included in the earlier return; (iv) any relief of tax claimed under section 159(2) on account of tax paid in any specified territory outside India referred to in that section on such income which has not been included in the earlier return; (v) any tax credit claimed, to be set off as per section 206(2)(e) to (h) and 206(3) and (4), which has not been claimed in the earlier return; and (b) as increased by refund, if any, issued in respect of such earlier return.
(8) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, by notification, issue guidelines for the purposes of removing the difficulty.
(9) Every guideline issued by the Board under sub-section (8) shall be laid before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in such guideline or both Houses agree that the guideline, should not be issued, the guideline shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that guideline.
(10) For the purposes of this section,— (a) interest payable under section 423, for the purposes of sub-section (1), shall be computed on the amount of tax on the total income as declared in the return under section 263(6), as per section 266(4); (b) interest payable under section 425, for the purposes of sub-section (3), shall be computed after taking into account the total income furnished in the return under section 263(6) as the returned income; (c) interest payable, for the purposes of sub-section (5), shall be the interest chargeable under any provision of this Act, on the income as per return furnished under section 263(6), as reduced by interest paid, as per the earlier return, if any.
(11) For the purposes of sub-section (10)(c), the interest paid in the earlier return shall be nil in case of an updated return referred to in sub-section (1).
Introduction
Section 267 imposes additional tax when an updated return is filed under the statutory route. The additional percentage depends on when that return is furnished.
This tax is calculated in addition to ordinary tax and interest, subject to the section’s computation and payment requirements.
Key takeaways
Updated returns carry extra tax
Additional income tax is payable with an updated return; the computation differs depending on whether an earlier return was filed.
Delay bands govern percentage
The section’s time bands determine the additional-tax percentage, on top of tax and interest.
Notice response adds ten points
A qualifying updated return filed within a section 280 notice period carries additional income tax increased by a further 10% of the computed tax-and-interest aggregate.
Where no earlier return was filed
Where no return under Section 263(1) or (4) has been filed, and tax is payable on the return now being furnished under Section 263(6), the assessee must pay that tax together with interest and fee for delay in filing/advance tax default, plus the additional income-tax computed under sub-section (5), all before furnishing the return - with proof of payment attached.
Where an earlier return was already filed
Where an earlier return under section 263(1), (4) or (5) exists, subsection (3) requires the further tax, interest and fee together with additional income-tax to be paid before the updated return, applying the stated adjustment for earlier interest. The computation accounts for the specified credits and increases the amount by any refund issued on the earlier return. Proof of payment of tax, additional income-tax, interest and fee must accompany the return.
How the additional income-tax is calculated
The additional income-tax payable at the time of furnishing the updated return under Section 263(6) is:
| When the updated return is filed | Additional income-tax |
|---|---|
| After the time available under Section 263(4) or (5) has expired, but before completion of 12 months from the end of the financial year succeeding the relevant tax year | 25% of the aggregate of tax and interest payable |
| After 12 months but before completion of 24 months from the end of that financial year | 50% of the aggregate of tax and interest payable |
| After 24 months but before completion of 36 months from the end of that financial year | 60% of the aggregate of tax and interest payable |
| After 36 months but before completion of 48 months from the end of that financial year | 70% of the aggregate of tax and interest payable |
Further additional tax for a return filed after a notice
Where an updated return is filed in pursuance of a notice issued under Section 280, within the period specified in that notice, the additional income-tax computed above is increased by a further 10% of the aggregate of tax and interest payable.
What counts as 'tax' for this calculation
For computing the additional income-tax, "tax" includes surcharge and cess, by whatever name called, on such tax.
Board guidelines for removing difficulties
If any difficulty arises in giving effect to this section, the Board may (with prior Central Government approval) issue guidelines by notification to remove the difficulty. Every such guideline must be laid before each House of Parliament for a total of thirty days, which may be in one session or successive sessions; both Houses can modify or annul it, without affecting the validity of anything already done under it.
Reconcile credits and interest separately
The no-earlier-return and earlier-return routes use different credit computations. Subsections (2) and (4) list advance/self-assessment amounts, TDS/TCS, foreign-tax relief and the current section 206 credits where applicable; the earlier-return route limits specified additional credits to income or claims not included earlier.
For the earlier-return route, subsection (7) defines the assessed-tax base for section 424 interest, including the earlier refund adjustment. Subsection (10) separately addresses sections 423 and 425 and the interest used in the additional-tax base. Tax includes surcharge and cess; the percentage base is tax plus interest, while the fee remains a separate payment requirement.
Step-by-step flow for tax on an updated return under Section 267
- 1
Was an earlier return furnished under section 263(1), (4) or (5)?
- No: Section 267(1) applies: credits are those in Section 267(2), and tax, interest and fee are payable. Go to the next step.
- Yes: Section 267(3) applies: credits are those in Section 267(4), increased by any refund issued on the earlier return. Go to the next step.
- 2
Compute the tax and interest payable on the updated return
Interest is computed as Section 267(10) provides. For the additional income-tax, interest is the interest chargeable on the updated-return income less interest paid in the earlier return; in a Section 267(1) case the earlier interest is nil (Sections 267(10)(c) and (11)). Tax includes surcharge and cess (Section 267(6)).
- 3
When is the updated return furnished, counted from the end of the financial year after the relevant tax year?
Additional income-tax under Section 267(5)(i) is a percentage of the aggregate of tax and interest payable: 25% (within 12 months, and after the time under section 263(4) or (5) has expired), 50% (after 12 but before 24 months), 60% (after 24 but before 36 months), 70% (after 36 but before 48 months).
- 4
Is the updated return filed in pursuance of a notice under section 280, within the period in that notice?
- Yes: Add a further 10% of the aggregate of tax and interest payable (Section 267(5)(ii)). Go to the next step.
- No: No further amount under Section 267(5)(ii). Go to the next step.
- 5
Pay everything before furnishing the return
Tax, additional income-tax, interest and fee must be paid before the return under section 263(6) is furnished, and proof of payment must accompany it (Section 267(1)(b)-(c) and (3)(b)-(c)).
Practical checklist
Do
- Identify the exact updated-return filing window and corresponding additional-tax rate.
- Recompute tax, interest and credits on the updated income and retain payment evidence.
Avoid
- Assume an updated return can be filed with no additional tax in every case.
Illustrative example
Worked example: an updated return where no earlier return was filed
Hypothetical facts (illustration only, not a real taxpayer): Ms. Kapoor did not file any return for tax year 2026-27. She furnishes an updated return under section 263(6) in October 2028. Assume the time available under section 263(4) and (5) has already expired. Tax on the declared income (including surcharge and cess) is ₹1,20,000 and tax deducted at source is ₹40,000. Interest chargeable is ₹12,000 and the fee for delay is ₹5,000. All amounts are assumed for illustration.
Which route
No earlier return was filed, so Section 267(1) applies and the credits are those in Section 267(2). Tax payable = ₹1,20,000 − ₹40,000 = ₹80,000.
Time band
The financial year after tax year 2026-27 ends on 31 March 2028. October 2028 is before twelve months from that date (31 March 2029), so the 25% band in Section 267(5)(i)(a) applies.
Additional income-tax
Aggregate of tax and interest = ₹80,000 + ₹12,000 = ₹92,000. 25% of ₹92,000 = ₹23,000. The earlier-return interest is nil under Section 267(11), and the fee is not part of this base.
Total to pay before filing
₹80,000 + ₹12,000 + ₹5,000 + ₹23,000 = ₹1,20,000.
If the facts were different
If she filed in June 2030 (after 24 but before 36 months), the rate would be 60%: ₹55,200. If the return were filed in pursuance of a section 280 notice within its period, a further 10% (₹9,200) would be added.
Outcome
- On these facts she must pay ₹1,20,000 and attach proof of payment to the updated return.
- The later the updated return, the higher the additional income-tax band; the rates are those written in Section 267(5).
Frequently asked questions
How much extra do I pay for filing an updated return late?
An additional income-tax on top of the tax and interest otherwise due: 25% if filed within 12 months (after the ordinary window closes) from the end of the financial year succeeding the relevant tax year; 50% if filed between 12 and 24 months; 60% if filed between 24 and 36 months; and 70% if filed between 36 and 48 months.
Is there an extra charge if I file an updated return only after getting a notice?
Yes - if the updated return is filed under Section 280 within the notice period, the additional income-tax is increased by a further 10% of the aggregate tax and interest payable.
Does 'tax' for this additional income-tax calculation include surcharge and cess?
Yes - Section 267(6) specifically says tax includes surcharge and cess, by whatever name called, for this computation.
Is the late-filing fee included when computing the additional income-tax on an updated return?
No. Section 267(5) computes the additional income-tax as a percentage of the aggregate of tax and interest payable. The fee is payable separately before the return is furnished, but it is not part of that base.
Need help applying this provision to your situation?
Get help filing an updated return (ITR-U)Last updated 10 October 2026