Section 267 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 267 says what must be paid before an updated return under section 263(6) is furnished: the tax, the interest and fee, and an additional income-tax whose rate rises with the time that has passed. It is the payment section behind the updated return. This article explains it as per the Income-tax Act, 2025 as amended by the Finance Act, 2026. Later amendments, the Income-tax Rules, 2026 and notifications should be checked separately.
Before furnishing an updated return, the assessee pays the tax, interest and fee and an additional income-tax of 25%, 50%, 60% or 70% of the tax and interest payable, depending on how late the updated return is (sub-section (5)(i)). Where the updated return is filed in response to a notice under section 280 within the period in the notice, a further 10% is added (sub-section (5)(ii)). Sub-section (5) and the tax-credit clauses were substituted by the Finance Act, 2026, w.e.f. 1-4-2026.
When section 267 applies: sub-sections (1) and (3)
There are two situations, depending on whether an earlier return exists.
- No earlier return (sub-section (1)). No return under section 263(1) or (4) has been furnished, and tax is payable on the basis of the return to be furnished under section 263(6) after taking into account the amounts in sub-section (2). The assessee must pay the tax together with the interest and fee for delay in furnishing the return or for default or delay in paying advance tax; these, with the additional income-tax, are payable before furnishing the return; and the return carries proof of payment.
- An earlier return exists (sub-section (3)). A return under section 263(1), (4) or (5) has been furnished, and tax is payable on the basis of the return under section 263(6) after taking into account the amounts in sub-section (4) as increased by any refund issued on the earlier return. The tax, interest and additional income-tax are payable before furnishing the return, with the additional income-tax reduced by the interest already paid in the earlier return.
For the updated return itself, see our note on belated, revised and updated returns. If you are considering one, our updated return filing service can help you work out what is payable.
What is deducted first: sub-sections (2) and (4)
| Sub-section | Amounts taken into account |
|---|---|
| (2), no earlier return | Advance tax already paid; tax deducted or collected at source; relief under section 157; relief or deduction under section 159(1) or 160; relief under section 159(2); tax credit under section 206(2)(e) to (h) and 206(3) and (4) |
| (4), earlier return | Relief or tax referred to in section 266(1), credit for which was taken in the earlier return; tax deducted or collected at source on income not included in the earlier return; relief or deduction under section 159(1) or 160 on such income; relief under section 159(2) on such income; and tax credit under section 206(2)(e) to (h) and 206(3) and (4) not claimed in the earlier return |
The tax-credit clauses in (2)(f), (4)(e) and the corresponding sub-clause in (7) were substituted by the Finance Act, 2026, w.e.f. 1-4-2026. The reliefs themselves are explained in our notes on section 157 and section 159.
Sub-section (5): the additional income-tax
Sub-section (5) was substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Clause (i) fixes the additional income-tax payable at the time of furnishing the return under section 263(6) as a percentage of the aggregate of tax and interest payable under sub-section (1) or (3).
| Clause | When the updated return is furnished | Additional income-tax |
|---|---|---|
| (a) | After the expiry of the time under section 263(4) or (5) and before completion of twelve months from the end of the financial year succeeding the relevant tax year | 25% |
| (b) | After twelve months but before completion of twenty-four months from the end of that financial year | 50% |
| (c) | After twenty-four months but before completion of thirty-six months | 60% |
| (d) | After thirty-six months but before completion of forty-eight months | 70% |
Clause (ii) adds that where an updated return is filed in pursuance of a notice issued under section 280 within the period specified in the notice, the additional income-tax under clause (i) is increased by a further sum of 10% of the aggregate of tax and interest payable under sub-section (1) or (3). The notice provision is explained in section 280.
A worked example
All amounts are assumed and the rates are those in the Table above. Rohan Pillai furnishes an updated return in the period of clause (b). The tax and interest payable under sub-section (1) together come to Rs. 50,000.
- Additional income-tax at 50%: Rs. 25,000.
- Total paid before furnishing the return: Rs. 50,000 plus Rs. 25,000, that is Rs. 75,000 (plus any fee).
If instead the return were filed in response to a section 280 notice within the notice period, an extra 10% of Rs. 50,000, that is Rs. 5,000, would be added to the additional income-tax, making Rs. 30,000.
Sub-sections (6) and (7): surcharge, cess and the interest on advance tax
Sub-section (6) says that for the additional income-tax, "tax" includes surcharge and cess, by whatever name called, on that tax. Sub-section (7) overrides section 424(2) for sub-section (3): interest under section 424 is computed on an amount equal to the "assessed tax", the tax on total income as declared in the return under section 263(6), after taking into account the items in (7)(a)(i) to (v) and as increased by any refund issued on the earlier return. These items are the section 266(1) reliefs claimed in the earlier return, tax deducted or collected at source not included in it, foreign tax relief on such income, and the section 206 tax credit not claimed in it. Clause (v) was substituted by the Finance Act, 2026, w.e.f. 1-4-2026. See our note on section 424.
Sub-sections (8) to (11): guidelines and how interest is worked out
- Sub-sections (8) and (9): if a difficulty arises in giving effect to the section, the Board may, with the previous approval of the Central Government, issue guidelines by notification. Each guideline is laid before each House of Parliament for thirty days; Parliament may modify it or decide that it should not be issued, without prejudice to what was done earlier. Whatever guidelines have been issued are not in the text consulted.
- Sub-section (10)(a): interest under section 423 for sub-section (1) is computed on the tax on the total income declared in the return under section 263(6), as per section 266(4).
- Sub-section (10)(b): interest under section 425 for sub-section (3) is computed taking the total income furnished in the return under section 263(6) as the returned income.
- Sub-section (10)(c) and (11): interest for sub-section (5) is the interest chargeable under any provision of the Act on the income as per the return under section 263(6), reduced by interest paid as per the earlier return, if any; for an updated return under sub-section (1), interest paid in the earlier return is nil.
The related interest provisions are explained in section 423 and section 425.
How section 267 sits beside section 266
Section 266 collects tax, interest and fee before an ordinary return; section 267 does the same for an updated return and adds the additional income-tax. Both refer to the same credits, and both treat non-payment seriously. Read section 266 alongside this section.
Need help with an updated return?
An updated return changes the position for a tax year already filed or missed, and the percentage depends on the date. Our income tax return filing team can work through the dates and the amounts before anything is paid.
Key takeaways
- Tax, interest, fee and additional income-tax must be paid before an updated return is furnished, with proof attached.
- The additional income-tax is 25%, 50%, 60% or 70% of tax and interest, depending on the time elapsed.
- A further 10% applies where the updated return is filed on a notice under section 280 within the notice period.
- Sub-section (5) and the tax-credit clauses were substituted by the Finance Act, 2026, w.e.f. 1-4-2026.
Read next
- Section 263: belated, revised and updated returns
- Section 266: self-assessment and the order of adjustment
- Section 280: the reassessment notice
- Section 424: interest for advance tax default
- Chapter XV of the Income-tax Act, 2025: return of income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.