ITR U - What is ITR-U & How to File Updated Return under Section 139(8A)

The concept of ITR-U, the updated return was introduced in the union budget 2022 to allow individuals to rectify the mistakes they made while filing the ITR or to allow one more chance to file who miss the belated return deadline. In this article, we will delve into the world of ITR-U, exploring what it is, when it is required, and how to file an updated return under Section 139(8A) of the Income Tax Act.

As per the recent CBDT update, the income tax department will send notices to individuals who have not filed tax returns despite tax deductions at source. The department is set to intensify its efforts in ensuring tax compliance. and is reaching out to taxpayers to update their returns

What is an ITR-U ( Updated ITR )?

In the Union Budget 2022, the government introduced the ITR U form for updating income tax returns. ITR-U is a form that allows taxpayers to correct errors or omissions on their ITRs up to two years from the end of the relevant assessment year to update their return. The ITR-U form is a rescue for those who have not filed their ITR or made inaccurate and false entries while filing their income tax returns. Section 139(8A) under the Income Tax Act allows you a chance to update your ITR within two years i.e. 24 months from the end of the relevant assessment year

By availing the provisions of Section 139(8A), taxpayers can rectify any errors or updates in their original return without facing legal consequences for incorrect information. These 2 years are calculated from the end of the year in which the original ITR was filed.

For instance, for AY 2023-24, you missed the revised/ belated return filing window, you can file an ITR-U after the end of the assessment year, i.e. 31 March 2024 but within two years from there, i.e. 31 March 2026.

Irrespective of whether the taxpayer has filed an original, belated, or revised ITR or has completely missed filing the ITR in a specific financial year.

Who is eligible to file Form ITR-U under Section 139(8A)?

Any taxpayer can file an updated return u/s 139 (8A) whether he has furnished/not furnished an original return, revised return, or belated return in case of any omission, error, or wrong statement in his earlier return of income.

An Updated Return can be filed if:

• Return previously not filed

• Income not reported correctly

• Wrong heads of income chosen

• Reduction of carried forward loss

• Reduction of unabsorbed depreciation

• Reduction of tax credit u/s 115JB/115JC

• Wrong rate of tax

Who is not eligible to file Form ITR-U u/s 139 (8A)?

An Updated Return under section 139(8A) cannot be filed if:

• If an updated return is already filed

• If an updated return is the return of loss

• If an updated return reduces Income Tax Liability in the return filed earlier

• If updated return results in the increase of Refund

• If a search has been initiated under section 132

• If books of Accounts or any other documents are requisitioned under section 132A.

• If the survey has been conducted under section 133A

• If any proceeding of assessment, reassessment, re-computation or revision is pending or completed for that relevant year

• If the Assessing Officer has information against such person under Prevention of Money Laundering Act or Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act or Benami Property Transactions Act or Smugglers and Foreign Exchange Manipulators Act and the same has been communicated to the assessee.

• If the information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him prior to the date of furnishing of return under this subsection.

• Other Notified Persons

What is the time limit to file ITR-U?

The time limit to file an updated return u/s 139 (8A) is 24 months from the end of the relevant assessment year. The updated return of FY 22-23 (AY 2023-24) can be filed till 31st March 2026.

For example,

Assessment Year

Last Date of Updated ITR Filing

AY (2021-22)   31 March 2024

AY(2022-23)    31 March 2025

AY(2023-24)    31 March 2026

Note:- For FY 2020-21 (AY 2021-22), an updated return can be filed by 31 March 2024. Don't delay further file ITR Today

Is there any penalty for updated return?

Late filing is always associated with penalties. One would need to pay an additional 25% percent of the tax and interest due on the income missed to be reported if the return is filed within one year from the end of the relevant assessment year. The penalty gets enhanced to 50 percent of additional tax and interest due if the return is filed after one year and within two years of the relevant assessment year.

For example:-

Income Earned in

Action

Penalty Applicable

AY 2022-23

Updated Return filing between April 1, 2023, and March 31, 2024 (12 months from the end of relevant AY)

25% of additional tax + interest ( if applicable) + Late filing Fees

AY 2022-23

Updated Return filing in between April 1, 2024, and March 31, 2025,(24 months from the end of relevant AY)

50% of additional tax + interest ( if applicable) + Late filing Fees

How to file Form ITR-U?

As per the Income tax rules, the updated return (ITR-U) has to be furnished along with an updated version of the applicable ITR form (ITR 1 – 7).

ITR-U seeks the following additional details from the taxpayers:

• PAN

• Aadhaar Number

• Assessment Year

• Whether return previously filed for this assessment year? (Yes/No)

• If yes, Whether filed u/s 139(1) Others

• If applicable, enter form filed, Acknowledgement no. or Receipt No. and Date of filing the original return (DD/MM/YYYY)

• Are you eligible to file an updated return? i.e., a person is not falling in such circumstances wherein an updated return can’t be filed.

• Selecting the ITR form for filing an updated return

• Reasons for updating income. This includes reasons such as returns previously not filed, income not reported correctly, wrong heads of income chosen, etc.

• Are you filing an updated return within 12 months from the end of the relevant AY or between 12 to 24 months from the end of the relevant AY?

• Are you filing an updated return to reduce carried forward loss, unabsorbed dep., or tax credit?

Part B – Computation of updated income and tax payable (ITR-U)

• 1 (A) Head of income under which additional income is being returned as per Updated Return

• 1 (B) Total income as per last valid return (only in cases where the Income Tax Return has previously been filed)

• Total income as per Part B-TI

• The amount payable, if any (To be taken from the ―Amount payable of Part B-TT of the updated ITR)

• Amount refundable, if any (To be taken from ―Refund‖ of Part B-TTI of the updated ITR

• The amount payable on the basis of last valid return (only in applicable cases)

• 6. (i) Refund claimed as per last valid return if any

• 6. (ii) Total Refund issued as per last valid return, if any (including interest u/s 244A received

• Fee for default in furnishing return of income u/s 234F

• Regular Assessment Tax, if any

• Aggregate liability on additional income

• Additional income-tax liability on updated income [25% or 50% of (9-7)]

• Net amount payable (9+10)

• Tax paid u/s 140B

• Tax due (11-12)

• Details of payments of tax on updated return u/s 140B

• Details of payments of Advance Tax / Self-Assessment Tax / Regular Assessment Tax, credit for which has not been claimed in the earlier return (credit for the same is not to be allowed again under section 140B(2) )

  • Note: Credit for the above is not to be allowed again under section 140B(2)

• Relief u/s 89, which is not claimed in earlier return [relief for the same is not to be allowed under section 140B(2)]

How to verify ITR-U?

ITR-U can be verified through -

• An Electronic Verification Code (EVC) is given for tax audit cases.

• Digital Signature Certificate (DSC) in non-tax audit cases.