Income Tax Act 2025: Section 263 for Tax Year 2026-27

Return of income

[Section-263 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Section 263(1) of Income Tax Act 2025

263(1)(a) The following persons shall furnish a return of income for the tax year under this Act, on or before the due date:—

• (i) a company;
• (ii) a firm;
• (iii) a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the tax year, without giving effect to the provisions of Chapter XVII-B or provisions of Schedule VIII (Table: Sl. No. 1) or deductions allowable under Chapter IV-E (Capital Gains) or Chapter VIII, as the case may be, exceeded the maximum amount which is not chargeable to income-tax;
• (iv) a specified entity if its total income without giving effect to the provisions of section 11, exceeds the maximum amount which is not chargeable to income-tax;
• (v) a University, college or other institution as referred to in section 45(3)(a);
• (vi) a business trust;
• (vii) an investment fund as referred to in section 224;
• (viii) a person who has sustained a loss in the tax year under the head “Profits and gains of business or profession” or under the head “Capital gains” and who intends to claim that such loss, or any part thereof, is to be carried forward as per this Act;
• (ix) a person who intends to make a claim of refund under Chapter XX;
• (x) a person, who is a resident, other than not ordinarily resident, and who at any time during the tax year,––
  • (A) holds, as a beneficial owner or otherwise, any asset (including any financial interest in an entity) located outside India, or has signing authority in any account located outside India; or
  • (B) is a beneficiary of any asset (including any financial interest in an entity) located outside India, except where any income arising from such asset is includible in the income of person referred to in item (A);
• (xi) a person, other than a company or firm, who during the tax year, fulfils such conditions as prescribed;

263(1)(b) for the purposes of this section, “due date” means the date of the financial year succeeding the relevant tax year as mentioned in the corresponding entry of column C of the Table below in respect of the persons mentioned in column B of the said Table below:

Table

Section 263(2) of Income Tax Act 2025

263(2)(a) The Board may make rules providing for the prescribed form for furnishing return of income, manner of its verification and such other particulars including––

• (i) the class or classes of persons who shall be required to furnish the return in electronic form or otherwise;
• (ii) the form and the manner in which the return may be furnished, whether in electronic form or otherwise;
• (iii) the documents, statements, receipts, certificates, audited reports or any other documents which may not be furnished along with the return in electronic form but shall be produced before the Assessing Officer on demand;
• (iv) the computer resource or the electronic record to which the return in electronic form may be transmitted;

263(2)(b) the particulars prescribed under clause (a) may also include––

• (i) income exempt from tax;
• (ii) assets of the prescribed nature and value held by the assessee as a beneficial owner or otherwise or in which he is a beneficiary;
• (iii) bank account and credit card held by the assessee;
• (iv) expenditure exceeding the prescribed limit incurred by the assessee under prescribed heads;
• (v) such other outgoings as prescribed;
• (vi) the report of any audit referred to in section 63 or a copy thereof;
• (vii) the particulars of the location and style of the principal place of the business or profession and all the branches thereof;
• (viii) the names and addresses of the partners, if any, in the business or profession;
• (ix) the names of the other members of the association of person or the body of individuals and the extent of the share of the assessee and the shares of all such members, in the profits of the business or profession and any branches thereof.

Section 263(3) of Income Tax Act 2025

263(3) The Central Government may, by notification, exempt any class or classes of persons, from the obligation to file a return of income under this section, subject to the conditions specified therein.

Section 263(4) of Income Tax Act 2025

263(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any tax year at any time within nine months from the end of the relevant tax year, or before the completion of the assessment, whichever is earlier.

Section 263(5) of Income Tax Act 2025

263(5) If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time within nine months from the end of the relevant tax year, or before the completion of the assessment, whichever is earlier.

Section 263(6) of Income Tax Act 2025

263(6)(a) Any person, whether or not he has furnished a return under sub-section (1) or (4) or (5) for a tax year, may furnish an updated return of his income or the income of any other person in respect of which he is assessable under this Act, at any time within forty-eight months from the end of the financial year succeeding the relevant tax year;

263(6)(b) the provisions of clause (a) shall continue to apply for a tax year if any person has sustained a loss in the said tax year and has furnished a return of loss within the due date specified under sub-section (1) and the updated return is a return of income;

263(6)(c) the provisions of clause (a) shall not apply for a tax year for any person, if––

• (i) the updated return is a return of loss;
• (ii) the updated return has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1) or (4) or (5) for the said tax year;
• (iii) the updated return results in refund where no refund was due or increases the refund due on the basis of return furnished under sub-section (1) or (4) or (5) for the said tax year;
• (iv) an updated return has already been furnished;
• (v) any proceeding for assessment or reassessment or recomputation or revision of income under this Act is pending or has been completed for the said tax year;
• (vi) the Assessing Officer is in the possession of information in respect of such person for the said tax year regarding violation of specified laws and the same has been communicated to him prior to the date of furnishing of updated return;
• (vii) information for the said tax year has been received under an agreement referred to in section 159 in respect of such person and the same has been communicated to him, prior to the date of furnishing of updated return;
• (viii) any prosecution proceedings under the Chapter XXII have been initiated for the said tax year in respect of such person, prior to the date of furnishing of updated return; or
• (ix) thirty-six months have expired from the end of the financial year succeeding the relevant tax year, and any notice to show-cause under section 281 has been issued in his case, except where an order has been passed under section 281(3) determining that it is not a fit case to issue notice under section 280; or
• (x) he is such person or belongs to such class of persons, as notified by the Board in this regard;

263(6)(d) a person shall also not be eligible to furnish an updated return of income, where—

• (i) a search has been initiated under section 247 or books of account or other documents or any assets are requisitioned under section 248 in the case of that person;
• (ii) a survey has been conducted under section 253, other than sub-section (4) of the said section, in the case of that person; or
• (iii) a notice has been issued to the effect that any money, bullion, jewellery, virtual digital asset or valuable article or thing, seized or requisitioned under section 247 or 248 in the case of any other person, belongs to that person; or
• (iv) a notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 247 or 248 in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, that person,

for the tax year in which such search is initiated or survey is conducted or requisition is made and any tax year preceding such tax year.

Section 263(7) of Income Tax Act 2025

263(7) A return of income furnished under this section, shall be treated as defective if it is not in conformity with all the conditions as prescribed and shall be dealt with in the following manner:––

• (a) where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within fifteen days from the date of such intimation or within a further period as may be allowed on an application made by the assessee in this behalf;
• (b) if the defect is not rectified within the period allowed under clause (a), then the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return;
• (c) where the assessee rectifies the defect after the expiry of the period allowed under clause (a), but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return.

Section 263(8) of Income Tax Act 2025

263(8)(a) The provisions of this section shall also apply to a return of income which is furnished in pursuance of an order passed under section 239(4)(3)(b);

263(8)(b) the provisions of this section shall not apply to a specified senior citizen, as referred to in section 402(39), for the relevant tax year in which tax has been deducted at source under section 393(1) [Table: Sl. No. 8 (iii)].

Section 263(9) of Income Tax Act 2025

263(9) In this section,––

• 263(9)(a) “beneficial owner”, in respect of an asset means an individual who has provided, directly or indirectly, consideration for the asset for the immediate or future benefit, direct or indirect, of himself or any other person;
• 263(9)(b) “beneficiary”, in respect of an asset means an individual who derives benefit from the asset during the tax year and the consideration for such asset has been provided by any person other than such beneficiary;
• 263(9)(c) “specified entity” means––
  • (i) research association referred to in Schedule III (Table: Sl. No. 23);
  • (ii) association or institution referred to in Schedule III (Table: Sl. No. 24);
  • (iii) person referred to in Schedule VII (Table: Sl. No. 2);
  • (iv) institution referred to in Schedule III (Table: Sl. No. 25);
  • (v) any University or other educational institution or any hospital or other medical institution referred to in Schedule VII (Table: Sl. Nos. 17, 18 and 19);
  • (vi) Mutual Fund referred to in Schedule VII (Table: Sl. No. 20 and 21);
  • (vii) securitisation trust referred to in Schedule III (Table: Sl. No. 26);
  • (viii) Investor Protection Fund referred to in Schedule III (Table: Sl. No. 28 and 29);
  • (ix) Core Settlement Guarantee Fund referred to in Schedule III (Table: Sl. No. 30);
  • (x) venture capital company or venture capital fund referred to in Schedule V (Table: Sl. No. 6);
  • (xi) trade union or association referred to in Schedule III (Table: Sl. No. 31);
  • (xii) Board or Authority referred to in Schedule VII (Table: Sl. No. 33 and 40);
  • (xiii) Body or Authority or Board or Trust or Commission (by whatever name called) referred to in Schedule III (Table: Sl. No. 36);
  • (xiv) infrastructure debt fund referred to in Schedule VII (Table: Sl. No. 46);
• 263(9)(d) “specified laws” shall refer to the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, or the Prohibition of Benami Property Transactions Act, 1988, or the Prevention of Money-laundering Act, 2002, or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

FAQs on Section 263 of Income Tax Act 2025

Who is required to file a return of income under section 263(1)(a)?
The following persons must file a return: a company, a firm, individuals or other entities whose total income exceeds the basic exemption before deductions or exemptions, specified entities, certain educational institutions, business trusts, investment funds, persons incurring business or capital losses and intending to carry them forward, those claiming refunds, resident individuals with foreign assets or signing authority, beneficiaries of foreign assets, and other persons as may be prescribed.

When is the due date for filing a return under section 263(1)(b)?
The due date depends on the category of the assessee:

• Company: 31st October
• Person (non-company) requiring audit: 31st October
• Partner (or their spouse, if applicable) of an audited firm: 31st October
• Person required to submit a report under section 172: 30th November
• Any other assessee: 31st July

What is the time limit to file a belated return under section 263(4)?
A person may file a return within nine months from the end of the relevant tax year or before the completion of the assessment, whichever is earlier.

Can a revised return be filed under section 263(5)?
Yes, a revised return can be filed within nine months from the end of the relevant tax year or before completion of assessment, whichever is earlier.

What is an updated return under section 263(6)?
An updated return can be filed within forty-eight months from the end of the financial year succeeding the relevant tax year, even if a return was not filed earlier.

Can an updated return be a return of loss?
No, an updated return cannot be a return of loss under section 263(6)(c)(i).

Can an updated return reduce tax liability or increase refund?
No, updated returns cannot decrease tax liability or increase refund compared to previous returns filed under section 263(1), (4), or (5).

What are the disqualifications for filing an updated return?
Disqualifications include pending assessments, tax evasion-related notices, information under tax treaties, initiated prosecutions, and specified search, survey, or requisition actions, among others.

What is the treatment of defective returns under section 263(7)?
If a return is defective, the Assessing Officer may give the assessee 15 days (or extended time) to rectify it. Failure to do so renders the return invalid. If corrected before assessment, the AO may condone the delay.

Does this section apply to returns filed under orders issued under section 239(4)(3)(b)?
Yes, section 263 applies to such returns.

Does section 263 apply to specified senior citizens?
No, it does not apply if tax has been deducted under section 393(1) [Table: Sl. No. 8(iii)] for the relevant tax year.

What is the meaning of ‘beneficial owner’ in section 263(9)(a)?
A beneficial owner is an individual who provides consideration for an asset for the benefit of themselves or another.

What is the meaning of ‘beneficiary’ in section 263(9)(b)?
A beneficiary is an individual benefiting from an asset funded by someone else.

What entities are considered ‘specified entities’ under section 263(9)(c)?
Specified entities include various research associations, universities, funds, authorities, institutions, and boards listed in relevant Schedules of the Act.

What are ‘specified laws’ under section 263(9)(d)?
Specified laws include the Smugglers and Foreign Exchange Manipulators Act, Prohibition of Benami Property Transactions Act, Prevention of Money-laundering Act, and the Black Money Act.

Can the government exempt classes of persons from filing returns?
Yes, under section 263(3), the Central Government may exempt certain classes of persons via notification.

Can the Board prescribe different forms and verification methods for return filing?
Yes, under section 263(2), the Board may specify forms, manner of furnishing, electronic submission, and required particulars or documents.

What particulars may be included in the return as prescribed under section 263(2)(b)?
These may include exempt income, asset details, bank accounts, high-value expenditures, audit reports, business locations, partners’ details, and members’ profit-sharing details.