The Updated Income Tax Return (ITR-U) is a provision under Section 139(8A) of the Income Tax Act, 1961, introduced to allow taxpayers to correct errors or omissions in their previously filed returns, even after the prescribed deadlines have passed. Whether it’s missed income, incorrect claims, or errors in reporting, the ITR-U form enables individuals to amend their returns and ensure compliance with tax laws.

Understanding ITR-U

An Updated Income Tax Return (ITR-U) is a mechanism that permits taxpayers to rectify previously filed returns. It is designed for those who either missed filing their return or need to amend errors or omissions in their original, belated, or revised returns. Unlike the belated return, which must be filed before a specific date (usually by December 31st of the assessment year), ITR-U can be filed after the due date, including after the belated return period has passed. This form is for situations where taxpayers realize that they missed reporting income, made incorrect claims, or applied incorrect tax rates.

Eligibility Criteria for Filing ITR-U

To be eligible for filing ITR-U, the taxpayer must meet the following criteria:

Failure to file a return within the original or belated deadline.

Mistakes or omissions in a previously filed return (whether it was original, belated, or revised).

Common scenarios where ITR-U can be filed include missed reporting of income or making incorrect claims in the initial filing. We provide the best ITR filing services!

Timeframe for Filing ITR-U

Taxpayers can file an updated return within 24 months from the end of the relevant assessment year. This extended window provides an opportunity to correct any discrepancies or omissions in the original return.

Additional Tax Liability

Filing an updated return under ITR-U requires the payment of additional tax. The additional tax is calculated based on the time elapsed since the end of the relevant assessment year:

Within 12 months: An additional 25% of the tax and interest due.

Between 12 to 24 months: An additional 50% of the tax and interest due.

This structure encourages taxpayers to promptly correct any errors in their returns.

Restrictions and Limitations

While ITR-U offers flexibility, certain conditions restrict its use:

The updated return cannot be a return of loss.

It should not result in a decrease in the total tax liability determined based on the previous return.

It should not result in a refund or increase the refund due based on the previous return.

It cannot be filed if a search or survey has been initiated against the taxpayer under specific sections of the Income Tax Act.

It is not applicable if prosecution proceedings have been initiated for the relevant assessment year.

These restrictions ensure that the provision is used appropriately and not for unintended benefits.

Procedure for Filing ITR-U

To file an updated return using ITR-U, taxpayers should follow these steps:

Access the Form: The ITR-U form is available on the Income Tax Department’s e-filing portal.

Fill in the Details: Provide the necessary information, including the reasons for updating the return, additional income to be reported, and recalculation of tax liability.

Compute Tax and Pay Additional Liability: Calculate the additional tax payable, including the requisite additional tax percentage based on the delay period, and pay the amount before submitting the form.

Submit the Form: After completing the form and paying the additional tax, submit the ITR-U through the e-filing portal.

This process ensures that taxpayers can correct their returns efficiently while remaining compliant with tax regulations.

Conclusion

The introduction of ITR-U under Section 139(8A) of the Income Tax Act provides taxpayers with a valuable opportunity to rectify errors or omissions in their tax returns beyond the standard deadlines. By understanding the eligibility criteria, timeframes, additional tax implications, and procedural steps, taxpayers can utilize this provision effectively to maintain compliance and avoid potential penalties. It is advisable to consult with tax professionals or refer to official guidelines when considering filing an updated return to ensure all requirements are met.