Income Tax Returns & Filing — Sections 263 to 268 [Income Tax Act, 2025]

Key Takeaways

• Section 263 of the Income Tax Act, 2025 (formerly Section 139 of the Income Tax Act, 1961) mandates filing of income tax returns by every person whose total income exceeds the basic exemption limit (or who meets specified conditions such as holding foreign assets, depositing above threshold amounts, etc.).
• Due dates vary by taxpayer category: 31 July for individuals/HUFs not subject to audit; 31 October for audit cases (Section 63, formerly Section 44AB); 30 November for transfer pricing cases.
• Belated return filing is permitted up to 31 December of the Assessment Year, subject to late fee under Section 428 (formerly Section 234F) of Rs. 5,000; Rs. 1,000 if income below Rs. 5 lakh.
• A revised return can be filed up to 31 December of the assessment year (same deadline as belated return).
• The updated return (ITR-U) mechanism under Section 263 (formerly Section 139(8A)) allows filing within 24 months (25% additional tax), 36 months (50% additional tax), or 48 months from end of assessment year.
• Rule 12 of the Income Tax Rules, 2026 prescribes the applicable ITR form for each category of taxpayer.
• Form 26AS, AIS (Annual Information Statement), and TIS (Taxpayer Information Summary) are pre-filled data sources that must be verified before filing.
• Section 268(1) (formerly Section 142(1)) empowers the Assessing Officer to issue notice requiring filing of return or production of accounts and documents.

Section 263 — Mandatory Return Filing

Every person whose total income (before allowing deductions under Chapter VIII, formerly Chapter VI-A) during the Tax Year exceeds the basic exemption limit is required to file a return of income on or before the due date under Section 263 of the Income Tax Act, 2025.

Who Must File Even If Income Is Below Exemption Limit?

The following categories must file regardless of income level:

| Category | Condition | |----------|-----------| | Foreign assets/income | Holds any asset (including signing authority) located outside India, or is a beneficiary of any asset located outside India | | High-value deposits | Aggregate deposits in one or more savings bank accounts exceed Rs. 50 lakh during the Tax Year | | High expenditure | Total expenditure on electricity exceeds Rs. 1 lakh, or expenditure on foreign travel exceeds Rs. 2 lakh during the Tax Year | | TDS/TCS exceeds threshold | Aggregate TDS/TCS during the year exceeds Rs. 25,000 (Rs. 50,000 for senior citizens) | | Business turnover | Gross receipts from business exceed Rs. 60 lakh or from profession exceed Rs. 10 lakh | | Deposits in current account | Aggregate deposits in current accounts exceed Rs. 1 crore during the Tax Year |

Due Dates Under Section 263

| Category of Taxpayer | Due Date | Applicable Form | |---------------------|----------|----------------| | Individuals, HUFs, AOP, BOI (non-audit) | 31 July of AY | ITR-1/ITR-2/ITR-3 | | Companies (all) | 31 October of AY | ITR-6 | | Persons requiring tax audit u/s 63 (formerly 44AB) | 31 October of AY | ITR-3/ITR-5/ITR-6 | | Partners in firms requiring audit | 31 October of AY | ITR-2/ITR-3 | | Persons requiring TP report | 30 November of AY | ITR-6/ITR-3/ITR-5 | | Trusts, political parties, institutions | 31 October of AY | ITR-7 |

Rule 12 (Income Tax Rules, 2026): This Rule prescribes the specific conditions under which each ITR form is applicable, the manner of furnishing (electronic/paper), and the digital signature requirements.

Belated Return — Section 263

If a person fails to file the return within the due date under Section 263, they may file a belated return on or before 31 December of the relevant Assessment Year.

Consequences of Belated Filing

| Consequence | Provision | Detail | |-------------|-----------|--------| | Late fee | Section 428 (formerly 234F) | Rs. 5,000 (Rs. 1,000 if total income does not exceed Rs. 5 lakh) | | Interest on tax due | Section 423 (formerly 234A) | 1% per month (or part) on unpaid tax from due date to date of filing | | Loss carry-forward restricted | Sections on set-off | Losses under heads business/profession, capital gains, and other sources (except house property loss) cannot be carried forward if return is belated | | No revision possible after time | Section 263 | A belated return can be revised, but the deadline remains 31 December of AY |

Revised Return — Section 263

If a person discovers any omission or any wrong statement in the original return or a belated return filed under Section 263, they may file a revised return at any time before 31 December of the Assessment Year or before the completion of assessment, whichever is earlier.

There is no limit on the number of times a return can be revised within the prescribed time limit.

Updated Return (ITR-U) — Section 263 and Section 267

The updated return provision is a significant compliance facilitation measure allowing taxpayers to voluntarily declare income that was omitted or under-reported. This is now provided under Section 263 read with Section 267 of the Income Tax Act, 2025 (formerly Section 139(8A) of the Income Tax Act, 1961).

Key Parameters of ITR-U

| Parameter | Detail | |-----------|--------| | Form | ITR-U (prescribed under Rule 12) | | Time limit | Within 24 months / 36 months / 48 months from end of relevant assessment year | | Additional tax — within 24 months | 25% of aggregate of tax and interest payable | | Additional tax — 24 to 36 months | 50% of aggregate of tax and interest payable | | Additional tax — 36 to 48 months | Additional tax as prescribed (currently under notification) | | Who can file | Any person who has filed or not filed the original return | | Cannot be filed if | Search initiated u/s 247 (formerly 132); survey u/s 253 (formerly 133A) conducted; assessment/reassessment pending; prosecution proceedings initiated; information received under agreements relating to the assessee |

Compliance Requirement

The taxpayer must pay the full amount of additional tax and interest before filing ITR-U. The payment is made using Challan No. 280 with the correct minor head for self-assessment tax.

Defective Return — Section 263

If the Assessing Officer considers a return to be defective (e.g., incomplete schedules, no computation of income, mismatch with Form 26AS, unsigned return), a notice is issued giving 15 days to rectify the defect. If the defect is not rectified within the time allowed (extendable on application), the return is treated as an invalid return — as if never filed.

Common defects include: not attaching audit report when required, not filing Form 3CEB for transfer pricing cases, mismatch in TDS claimed vs. Form 26AS, and incomplete disclosure of exempt income or foreign assets.

Section 263(2) — Verification of Return

Every return must be verified by the person specified under Section 263(2) of the Income Tax Act, 2025 (formerly Section 140):

| Entity Type | Who Signs/Verifies | |-------------|-------------------| | Individual | The individual himself; if absent from India, the individual or any person duly authorised by power of attorney | | HUF | The Karta; if Karta is absent, any adult member | | Company | Managing Director; if MD is not available, any Director; if company is wound up, liquidator | | Firm | Managing partner; if absent, any partner (not being a minor) | | LLP | Designated partner u/s 2(j) of LLP Act | | AOP/BOI | Any member of the AOP/BOI | | Trust | Trustee | | Political party | Chief executive officer |

Electronic verification is done through Aadhaar OTP, net banking, bank account EVC, Demat account EVC, or by sending a signed ITR-V (Form prescribed under Rule 12) to CPC Bengaluru within 30 days of filing.

Section 266 — Self-Assessment Tax

Before filing the return, if any tax is payable after adjusting TDS, TCS, advance tax paid, and relief under Sections 159/160 (formerly Sections 90/91), the assessee must compute and pay such self-assessment tax along with interest under Sections 423, 424, and 425 (formerly Sections 234A, 234B, and 234C). Section 266 of the Income Tax Act, 2025 corresponds to the erstwhile Section 140A of the Income Tax Act, 1961.

Form: Challan No. 280 (ITNS 280) with Minor Head 300 (Self-Assessment Tax).

If self-assessment tax is not paid before filing, the return may be treated as defective. Interest continues to accrue until the date of payment.

Section 268(1) — Notice to File Return or Produce Documents

The Assessing Officer may issue notice under Section 268(1) of the Income Tax Act, 2025 (formerly Section 142(1)) in two situations:

1. To file a return — If any person has not filed a return within the time allowed under Section 263, and the AO considers it necessary, a notice can be issued requiring the person to file a return within the time specified in the notice.

2. To produce documents — Where a return has been filed, the AO may require the assessee to produce accounts, documents, or other evidence as may be specified, or to furnish information on specified points.

Non-compliance with Section 268(1) notice can attract penalty under Section 465 (formerly Section 271(1)(b), Rs. 10,000 per failure).

ITR Forms — Complete Guide (Rule 12 of Income Tax Rules, 2026)

Rule 12 of the Income Tax Rules, 2026 (formerly Rule 12 of the Income Tax Rules, 1962) prescribes the following ITR forms:

ITR-1 (Sahaj)

| Parameter | Detail | |-----------|--------| | For whom | Resident individuals (not ordinarily resident excluded) | | Income sources | Salary/pension, one house property, other sources (interest, dividend, family pension), agricultural income up to Rs. 5,000 | | Total income limit | Up to Rs. 50 lakh | | Cannot use if | Director in a company; has unlisted equity shares; has foreign assets/income; has signing authority in foreign account; income from business/profession; capital gains; more than one house property; agricultural income > Rs. 5,000; claims loss carry-forward |

ITR-2

| Parameter | Detail | |-----------|--------| | For whom | Individuals and HUFs not having income from business or profession | | Income sources | All sources except business/profession (salary, multiple house properties, capital gains, other sources, foreign income) | | Special features | Schedule FA (foreign assets), Schedule CG (capital gains), Schedule OS (other sources with detailed breakup) |

ITR-3

| Parameter | Detail | |-----------|--------| | For whom | Individuals and HUFs having income from business or profession | | Income sources | All sources including business/profession | | Includes | P&L Account, Balance Sheet, Schedule BP (business income), Form 3CD details if audit applicable |

ITR-4 (Sugam)

| Parameter | Detail | |-----------|--------| | For whom | Individuals, HUFs, and firms (other than LLP) opting for presumptive taxation under Section 58 (formerly Sections 44AD, 44ADA, or 44AE) | | Total income limit | Up to Rs. 50 lakh | | Cannot use if | Income from more than one house property; capital gains; foreign assets/income; agricultural income > Rs. 5,000; director in a company; claims losses to carry forward |

ITR-5

| Parameter | Detail | |-----------|--------| | For whom | Firms, LLPs, AOPs, BOIs, artificial juridical persons, cooperative societies, local authorities | | Note | Not for persons filing ITR-7 (trusts, etc.) |

ITR-6

| Parameter | Detail | |-----------|--------| | For whom | Companies other than those claiming exemption under Section 11 (formerly Section 11 of the Income Tax Act, 2025 covers charitable trusts; the old Section 11 exemption is now under Sections 334/341) | | Mandatory | Must be filed electronically with digital signature | | Includes | Complete financial statements, MAT computation (Schedule MAT — Form 29B data), detailed schedules for all income heads |

ITR-7

| Parameter | Detail | |-----------|--------| | For whom | Persons (including companies) required to furnish return under the provisions for charitable/religious trusts, political parties, scientific research associations, news agencies, universities/colleges/institutions |

Form 26AS, AIS and TIS — Pre-filled Verification

Form 26AS (Annual Tax Statement)

Form 26AS is the consolidated tax statement that reflects:

• TDS deducted and deposited by deductors (salary, bank interest, professional fees, etc.)
• TCS collected
• Advance tax and self-assessment tax paid by the assessee
• Refunds received
• SFT (Specified Financial Transactions) reported by banks, mutual funds, registrars

Annual Information Statement (AIS) and Taxpayer Information Summary (TIS)

The AIS is a comprehensive statement providing a holistic view of all financial transactions reported by third parties:

| Information Category | Sources | |---------------------|---------| | Salary and TDS | Employer via Form 24Q | | Interest, dividend, rent | Banks, companies, tenants via TDS returns | | Securities transactions | Stock exchanges, depositories, mutual fund houses | | Immovable property | Registrar/Sub-registrar, buyers | | Foreign remittances | Authorised dealers, banks | | Cash deposits/withdrawals | Banks | | GST turnover | GSTN |

The TIS is a derived summary of the AIS, aggregating information by category. Taxpayers must verify AIS data and provide feedback (confirm, deny, or mark as duplicate) before filing.

Compliance tip: Mismatches between AIS/TIS and the filed return are flagged by CPC for prima facie adjustment under Section 270(1) or selection for scrutiny under Section 270(3).

Landmark Judgement

Worked Example — Due Date Calendar and Penalty Calculations

Scenario: Mr. Rajesh Kumar is a salaried individual (non-audit case). His total income for the Tax Year 2025-26 (AY 2026-27) is Rs. 12,00,000. Tax liability after TDS: Rs. 48,000. He missed the due date and filed on 15 October 2026.

Due Date Determination

| Taxpayer Type | Due Date | Penalty (Section 428) | |--------------|----------|----------------------| | Mr. Rajesh (salaried, non-audit) | 31 July 2026 | Rs. 5,000 | | Ms. Priya (business, audit u/s 63) | 31 October 2026 | Nil (if filed by 31 Oct) | | ABC Pvt Ltd (TP report required) | 30 November 2026 | Nil (if filed by 30 Nov) | | XYZ Trust | 31 October 2026 | Nil (if filed by 31 Oct) |

Mr. Rajesh's Penalty and Interest Calculation

| Component | Calculation | Amount | |-----------|------------|--------| | Late fee u/s 428 | Income > Rs. 5 lakh, filed after due date | Rs. 5,000 | | Interest u/s 423 | Rs. 48,000 x 1% x 3 months (Aug, Sep, Oct — part month counts as full) | Rs. 1,440 | | Interest u/s 424 | Advance tax not paid — Rs. 48,000 x 1% x 7 months (Apr to Oct) | Rs. 3,360 | | Interest u/s 425 | Deferment of advance tax instalments (computed per quarter) | ~Rs. 1,440 | | Total additional cost | | Rs. 11,240 |

Had Mr. Rajesh filed ITR-U (updated return) after missing even the belated return deadline (31 December 2026), within 24 months, he would pay an additional 25% of (Rs. 48,000 + interest) = approximately Rs. 12,000 additional tax.

Expert Tip: Always verify your AIS/TIS data and Form 26AS before filing your return. Mismatches in TDS, high-value transactions, or securities transactions are the primary triggers for Section 270(1) prima facie adjustments and Section 270(3) scrutiny notices. Download AIS from the e-filing portal, provide feedback on each transaction, and reconcile with your books. Filing within the original due date under Section 263 preserves all loss carry-forward rights and avoids the compounding effect of interest under Sections 423, 424, and 425.

Section Interconnect

• Chapter 11 — Assessment & Scrutiny (Sections 270–282): Once a return is filed under Section 263, it is processed under Section 270(1) and may be selected for scrutiny under Section 270(3). The return filed is the foundation document for all assessment proceedings.
• Chapter 10 — TDS, TCS & Advance Tax (Sections 392–408): Self-assessment tax under Section 266 must account for all TDS, TCS, and advance tax already paid. Form 26AS reconciliation is essential.
• Chapter 13 — Penalties & Prosecution (Sections 439–479): Non-filing or delayed filing attracts fees under Section 428 and potential prosecution under Section 479 for wilful failure to file.
• Chapter 18 — Tax Audit (Section 63): Tax audit due date (30 September) precedes the return filing due date for audit cases (31 October). Delay in audit delays the return.

Frequently Asked Questions

1. Can I file my return after 31 December of the Assessment Year?

Under the regular provisions, no — 31 December of the assessment year is the last date for filing a belated or revised return under Section 263. However, you can file an updated return (ITR-U) within 24/36/48 months from the end of the assessment year by paying additional tax of 25%/50% (plus interest). The AO can also issue a notice under Section 268(1) requiring you to file a return even after the belated return deadline.

2. Which ITR form should a salaried individual with capital gains from mutual fund redemption use?

If total income is up to Rs. 50 lakh, the individual has only salary, one house property, and other sources (no capital gains), ITR-1 (Sahaj) is sufficient. However, once you have capital gains from mutual fund redemption, you must use ITR-2 (or ITR-3 if you also have business income). ITR-1 does not have a schedule for capital gains.

3. What happens if I file a defective return and do not rectify within 15 days?

If you do not rectify the defect within 15 days of receiving notice — or within the extended time if the AO grants an extension — the return is treated as invalid, i.e., as if it was never filed. This means all consequences of non-filing apply: late fee under Section 428, interest under Section 423, inability to carry forward losses, and potential penalty proceedings.

4. Can a company file ITR-1 or ITR-4?

No. Companies must mandatorily file ITR-6 (or ITR-7 if applicable). ITR-1 (Sahaj) is only for resident individuals, and ITR-4 (Sugam) is for individuals, HUFs, and firms (other than LLP) under presumptive taxation. Rule 12 of the Income Tax Rules, 2026 explicitly excludes companies from these forms.

5. Is e-verification mandatory, or can I send a signed ITR-V by post?

You have the option of either electronic verification (Aadhaar OTP, net banking, bank/demat EVC, or DSC) or sending a signed ITR-V to CPC Bengaluru by ordinary or speed post within 30 days of filing the return. However, if verification is not completed within 30 days, the return is treated as not filed. For companies and persons required to furnish returns electronically, digital signature certificate (DSC) is mandatory for verification.

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