Updated Income Tax Return (ITR U)
Ever filed an income tax return (ITR) and then realized you forgot to include some income, claimed the wrong deductions, or simply made a mistake? Don’t panic! The Income Tax Department offers a lifeline to rectify these errors through the ITR-U mechanism, empowered by Section 139(8A) of the Income Tax Act
What is ITR-U?
The Income Tax department has notified Form ITR-U under section 139(8A) of the Income Tax Act, 1961 for filing the ‘UPDATED’ Income tax return. The government introduced this concept in the ‘Union Budget 2022’.
The Updated Return allows the assessee to rectify errors or omissions and update your previous ITR. The assessee who missed the revised/belated return can file the return through ITR-U.
Benefits of Filing ITR-U
- Corrects Mistakes: Did you miss including income from a source? Did you claim deductions you weren’t eligible for? ITR-U lets you rectify these errors and potentially reduce your tax liability.
- Avoids Penalties:Filing an ITR-U within the stipulated timeframe can help you avoid penalties that may be imposed for inaccurate tax filings.
- Provides Peace of Mind:Having a corrected tax return ensures your tax records are accurate and eliminates the worry of future issues.
Who can file ITR-U?
Great news! Section 139(8A) allows any taxpayer to file an ITR-U, irrespective of whether you previously filed an original return, a revised return, or missed filing altogether.
When to File ITR-U
The time limit for filing ITR-U is 24 months from the end of the relevant assessment year along with the payment of additional taxes. This window provides ample time to identify and rectify any mistakes in your original filing.
| Sr. No. | Year | Last date to file ITR- U |
| 1. | FY 2020-21 (AY 2021-22) | 31st March 2024 |
| 2. | FY 2021-22 (AY 2022-23) | 31st March 2025 |
| 3. | FY 2022-23 (AY 2023-24) | 31st March 2026 |
An Updated Return can be filed if:
- Previously Return was not filed.
- Income was not reported correctly.
- Wrong heads of Income Chosen.
- Wrong rate of tax.
- Reduction of unabsorbed depreciation.
- Reduction of carry forward losses.
- Reduction of tax credit u/s 115JB/ 115 JC.
An Updated Return under section 139(8A) cannot be filed if:
- When Updated return is the Return of Loss.
- Nil return.
- Increase in refund/claiming of refund.
- If the total tax liability is to be reduced.
- Losses to be adjusted against the Income.
- Search/ Survey/ Prosecution proceedings are initiated for that AY.
- Assessment/ Reassessment/ revision is pending or completed for that AY.
- Updated Return already Filed.
- Updated Return reduces income tax liability in the return filed earlier.
A taxpayer can file only one updated return for each assessment year (AY).
The Act did not allow the taxpayer to update the return if there is ‘NO ADDITIONAL TAX LIABILITY’. It means in case of refund and increase of loss you are not able to file the ITR – U.
Is there any penalty for updated return?
Late submission of tax returns always results in penalties. One would need to pay an additional 25% of the tax and interest due if the filing occurs within one year from the end of the relevant assessment year. If the return is filed after one year but within two years, the penalty escalates to 50% of the additional tax and interest owed.
For Example:
The taxpayer has to pay the additional tax as per the below table:
| S. No. | Income earned in Year | Particulars | Additional Tax |
| 1.
|
AY 2022-23 | If updated ITR is filed within 12 Months from the end of the relevant AY. | 25% of additional tax + interest (if applicable) + late filing Fees. |
| 2. | AY 2022-23 | If updated ITR is filed after 12 Months but before 24 months from the end of the relevant AY. | 50% of additional tax + interest (if applicable) + late filing Fees. |
The Takeaway
Filing an ITR-U is a convenient and safe way to address errors in your income tax return. By taking advantage of this provision, you can ensure your tax filings are accurate and avoid potential penalties. Remember, the deadline for filing an ITR-U is 24 months from the end of the relevant assessment year. So, if you suspect any mistakes in your past ITR, don’t hesitate to utilize this beneficial option!
