Section 267 of the Income-tax Act, 2025 requires additional income-tax with an updated return under section 263(6): 25% within twelve months, 50% within twenty-four, 60% within thirty-six and 70% within forty-eight months of the end of the financial year succeeding the tax year.
What section 267 does
Section 267 is the price of an updated return — the successor to section 140B of the Income-tax Act, 1961. The updated return itself is filed under section 263(6); section 267 fixes what must be paid with it.
The charge escalates with delay. The additional income-tax is a percentage of the aggregate of tax and interest payable, and it rises through four tiers: 25%, 50%, 60% and 70%, measured from the end of the financial year succeeding the relevant tax year.
Two structural points matter. Sub-section (6) provides that for computing additional income-tax, tax includes surcharge and cess — so the base is larger than the headline tax figure. And the whole amount must be paid before furnishing the return, with proof of payment attached.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 140B(1) | Where no earlier return was furnished | 267(1) and 267(2) |
| 140B(2) | Where an earlier return was furnished | 267(3) and 267(4) |
| 140B(3) | Rates of additional income-tax | 267(5) |
| 140B(4) | Tax includes surcharge and cess | 267(6) |
| 139(8A) | Updated return | 263(6) |
| 140A | Self-assessment | 266 |
Section 267 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-sections (1) and (2) — where no earlier return was filed
Where no return under section 263(1) or (4) has been furnished and tax is payable on the updated return under section 263(6), the assessee must pay that tax with interest and fee for the delay and for advance tax default, together with the additional income-tax computed under sub-section (5), before furnishing the return — with proof of payment. The credits allowed are advance tax, TDS and TCS, and the reliefs under sections 157, 159 and 160 and the section 206 tax credits.
Sub-sections (3) and (4) — where an earlier return was filed
Where an earlier return under section 263(1), (4) or (5) was furnished, the amounts in sub-section (4) are taken into account, as increased by any refund already issued on that earlier return. The additional income-tax is then payable as reduced by the interest already paid in the earlier return.
Sub-section (5) — the four rate tiers
The additional income-tax is a percentage of the aggregate of tax and interest payable: 25% where the return is furnished after the time under section 263(4) or (5) but before twelve months from the end of the financial year succeeding the relevant tax year; 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.
Sub-section (6) — surcharge and cess are in the base
For computing additional income-tax, tax shall include surcharge and cess, by whatever name called. A taxpayer in the surcharge brackets therefore pays the tier percentage on a materially larger base than the basic tax figure alone.
Sub-sections (8) to (11) — guidelines and interest computation
The Board may issue guidelines to remove difficulties, with the previous approval of the Central Government, and these are to be laid before each House of Parliament. Sub-section (10) sets how interest under sections 423 and 425 is computed for these purposes, and sub-section (11) provides that where there was no earlier return, the interest paid in the earlier return is nil.
Worked example
For tax year 2026-27, the financial year succeeding it ends on 31 March 2028. A taxpayer with unreported income files an updated return under section 263(6).
| Filed by | Months from 31 March 2028 | Additional income-tax under section 267(5) |
|---|---|---|
| 31 March 2029 | Within twelve months | 25% of tax and interest |
| 31 March 2030 | Twelve to twenty-four months | 50% |
| 31 March 2031 | Twenty-four to thirty-six months | 60% |
| 31 March 2032 | Thirty-six to forty-eight months | 70% |
Taking a concrete case: tax of ₹5,00,000 and interest of ₹1,20,000 on an updated return filed in the third tier gives additional income-tax of 60% × ₹6,20,000 = ₹3,72,000, payable on top of the ₹6,20,000 — a total of ₹9,92,000. And because sub-section (6) includes surcharge and cess in 'tax', a high-income taxpayer's base would be higher still.
The whole amount must be paid before the updated return is furnished, with proof of payment.
Compliance checklist and due dates
- Identify the correct tier by counting from the end of the financial year succeeding the relevant tax year, not from the end of the tax year itself.
- Include surcharge and cess in the tax base, as sub-section (6) requires.
- Where an earlier return was filed, reduce the additional income-tax by the interest already paid in that return, and add back any refund issued.
- Pay tax, interest, fee and additional income-tax before furnishing the return, and attach proof.
- Compare the cost of an updated return against the exposure under section 439 if the omission is later detected — the additional income-tax is often the cheaper outcome.
- Note the outer limit: no updated return beyond forty-eight months from the end of the financial year succeeding the tax year.
Common mistakes
- Counting the tiers from the end of the tax year instead of from the end of the succeeding financial year.
- Computing the percentage on basic tax alone and omitting surcharge and cess.
- Filing the updated return before paying the additional income-tax.
- Forgetting to add back a refund already issued on the earlier return, under sub-section (3).
- Assuming an updated return can be filed indefinitely; the last tier ends at forty-eight months.
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.
Related Guides
- Section 266 — self-assessment tax
- Chapter XV — return of income
- Income-tax Act 1961 vs 2025 — master comparison
- Section mapping cheat sheet: 1961 to 2025
Key Facts About Section 267 of Income
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
Which section replaces section 140B?
Section 267 of the Income-tax Act, 2025 — tax on updated return.
What is the additional tax on an updated return?
25% of tax and interest if filed within twelve months, 50% within twenty-four, 60% within thirty-six and 70% within forty-eight months from the end of the financial year succeeding the relevant tax year.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Section 267 of Income: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.