Section 267 — Tax on updated return. Successor to s.140B of the 1961 Act.
Section 267 is in Chapter XV — Return of Income, which runs from section 262 to section 267.
The section prices an updated return under section 263(6), and it does so differently according to whether an earlier return exists.
Sub-section (1) covers the case where no return under section 263(1) or (4) has been furnished and, after taking into account the amounts in sub-section (2), tax is payable on the basis of the return to be furnished under section 263(6). The assessee is liable to pay that tax together with interest and fee payable under any provision of the Act for any delay in furnishing the return or any default or delay in payment of advance tax; that tax, interest and fee is payable along with the additional income-tax computed under sub-section (5), before furnishing the return; and the return must be accompanied by proof of payment. Sub-section (2) lists the credits to be taken into account: advance tax already paid, tax deducted or collected at source, relief claimed under section 157, relief or deduction claimed under section 159(1) or 160 for tax paid outside India, relief under section 159(2) for tax paid in a specified territory, and — as substituted by Act No. 4 of 2026 with effect from 1 April 2026 — any tax credit claimed to be set off as per section 206(2)(e) to (h) and section 206(3) and (4).
Sub-section (3) covers the case where an earlier return under section 263(1), (4) or (5) has been furnished. There the credits in sub-section (4), as increased by any refund issued on the earlier return, are taken into account, and the assessee pays the resulting tax with interest for any default or delay in advance tax, along with the additional income-tax under sub-section (5) as reduced by interest already paid under the earlier return, before furnishing the return, with proof of payment. Sub-section (4) lists those credits: relief or tax under section 266(1) already credited in the earlier return; tax deducted or collected at source under Chapter XIX-B on income taken into account but not included in the earlier return; relief under section 159(1) or 160 and under section 159(2) on such income; and, again as substituted in 2026, tax credit claimed under section 206(2)(e) to (h) and section 206(3) and (4) not claimed in the earlier return.
Sub-section (5), also substituted by Act No. 4 of 2026 with effect from 1 April 2026, sets the additional income-tax as a percentage of the aggregate of tax and interest payable determined under sub-section (1) or (3), on a sliding scale measured from the end of the financial year succeeding the relevant tax year: 25% if the return is furnished after the time under section 263(4) or (5) expires and before twelve months; 50% after twelve but before twenty-four months; 60% after twenty-four but before thirty-six months; and 70% after thirty-six but before forty-eight months. Clause (ii) adds a further 10% of that aggregate where the updated return is filed in pursuance of a notice issued under section 280 within the period specified in the notice.
Sub-section (6) makes tax include surcharge and cess for computing the additional income-tax. Sub-section (7) overrides section 424(2) for sub-section (3) cases: interest under section 424 is computed on an amount equal to the assessed tax, meaning tax on the total income declared in the section 263(6) return after the credits listed and as increased by any refund issued on the earlier return. Sub-sections (8) and (9) let the Board, with the previous approval of the Central Government, issue guidelines by notification to remove difficulties, and require every guideline to be laid before each House of Parliament for thirty days, with the usual power of modification or annulment. Sub-section (10) fixes how interest is computed under sections 423, 425 and for sub-section (5), and sub-section (11) provides that for an updated return under sub-section (1), the interest paid in the earlier return is nil.
An updated return lets a taxpayer come forward after the ordinary and revised return windows have closed, and the section makes that voluntary correction cost more the longer it is left. The escalating additional income-tax is the whole design: it is not a penalty imposed by an officer but a self-computed levy the assessee must pay before the return can be furnished at all. Clause (5)(ii) adds a further layer where the coming-forward is not really voluntary — where the updated return follows a notice under section 280.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Additional income-tax, first slab | 25% of the aggregate of tax and interest payable | Return 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 | Sub-section (5)(i)(a) |
| Additional income-tax, second slab | 50% of the aggregate of tax and interest payable | Return furnished after twelve months but before twenty-four months from the end of the financial year succeeding the relevant tax year | Sub-section (5)(i)(b) |
| Additional income-tax, third slab | 60% of the aggregate of tax and interest payable | Return furnished after twenty-four months but before thirty-six months from the end of the financial year succeeding the relevant tax year | Sub-section (5)(i)(c) |
| Additional income-tax, fourth slab | 70% of the aggregate of tax and interest payable | Return furnished after thirty-six months but before forty-eight months from the end of the financial year succeeding the relevant tax year | Sub-section (5)(i)(d) |
| Uplift where the updated return follows a section 280 notice | A further 10% of the aggregate of tax and interest payable | Updated return filed in pursuance of a notice issued under section 280 within the period specified in that notice; added to the applicable slab rate | Sub-section (5)(ii) |
| Time for laying a Board guideline before Parliament | Thirty days | Which may be comprised in one session or in two or more successive sessions | Sub-section (9) |
The additional income-tax is charged on the aggregate of tax and interest, not on tax alone, and sub-section (6) folds surcharge and cess into that tax, so the levy is computed on a larger base than the headline figure suggests. All four slabs run from the end of the financial year succeeding the relevant tax year, not from the tax year itself and not from the return due date, so the slab is fixed by the date of furnishing. Payment is a precondition, not a follow-up: sub-sections (1)(b) and (3)(b) require tax, interest, fee and additional income-tax to be paid before furnishing the return, and clause (c) of each requires proof of payment to accompany it. For a second or later updated return there is relief against double counting — sub-section (3)(b) reduces the additional income-tax by interest already paid under the earlier return, and sub-section (11) makes that reduction nil where there was no earlier return. The 10% in clause (5)(ii) is an addition to the slab rate, so a return filed in the second slab in response to a section 280 notice carries 60% in total, not 50%. The 2026 substitutions in sub-sections (2)(f), (4)(e) and (7)(a)(v) changed which tax credits may be brought in, replacing the reference to section 206(1)(m) to (p) with section 206(2)(e) to (h) and section 206(3) and (4).
An individual filed no return for a tax year and now files an updated return under section 263(6) twenty months after the end of the financial year succeeding that year. Tax payable after the sub-section (2) credits is Rs 8 lakh and interest is Rs 2 lakh, an aggregate of Rs 10 lakh. The applicable slab is 50%, so additional income-tax is Rs 5 lakh, and the whole Rs 15 lakh must be paid before the return is furnished, with proof of payment attached. Had the same return been filed in pursuance of a notice under section 280 within the period specified in it, clause (5)(ii) would add a further 10% of Rs 10 lakh, making the additional income-tax Rs 6 lakh.
When furnishing an updated return under section 263(6), where the tax, interest, fee and additional income-tax must already have been paid and the proof of payment attached. It also arises after a notice under section 280, where filing within the period specified in the notice attracts the extra 10% under sub-section (5)(ii).
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
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
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.
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
