How to Correct Filed Returns with ITR U Under Section 139 and Avoid Income Tax Notices
Rashmita Choudhary- 17 hours ago
- 10 min read
Correcting income tax returns after filing is a common necessity for many taxpayers, as errors or omitted details in the initial return can result in penalties, notices, or assessments from the Income Tax Department. Section 139(8A) of the Income Tax Act introduced the ITR-U (Updated Income Tax Return) filing mechanism to provide a streamlined way for taxpayers to correct mistakes in previously filed returns. This filing option allows individuals to rectify inaccuracies, report additional income, or claim missed deductions without facing severe penalties.
ITR-U provides taxpayers with an opportunity to amend errors and missed disclosures up to four years after the end of the assessment year. However, it's essential to follow the correct procedure to avoid complications such as income tax notices.
Table of Contents
How to Correct Filed Returns with ITR U Under Section 139 and Avoid Income Tax Notices?
ITR-U is a unique provision under the Income Tax Act that allows taxpayers to correct errors or disclose additional income that was missed in the original income tax return. The provision is useful when taxpayers realize that they made a mistake or omitted essential details, such as unreported income or missed deductions, in their previously filed return.
The process of filing ITR-U is straightforward but requires careful attention to detail. Taxpayers can file ITR-U up to four years after the end of the relevant assessment year. For example, for FY 2020-21, taxpayers can file ITR-U until March 31, 2025. The key point here is that ITR-U cannot be used for requesting refunds or carrying forward losses to subsequent years. Additionally, taxpayers must pay the applicable tax, including interest, for any additional income or corrections.
The process involves:
Correcting Mistakes: If the original return had errors or missing information, the taxpayer must amend it by accurately disclosing the corrected details in the ITR-U.
Filing Before the Deadline: ITR-U can only be filed within the specific time frame (up to four years from the end of the assessment year). Filing after this window may result in ineligibility to correct the return.
Payment of Additional Tax and Interest: Before filing ITR-U, any additional tax liability arising due to corrections or missed income must be settled, including the interest on the additional tax.
Filing the Correct Option: When filing ITR-U, select the "Revised Return" option to amend your previous submission.
By following the correct steps, ITR-U helps avoid any discrepancies that could lead to scrutiny notices, penalties, or further complications with the Income Tax Department. It is crucial to file the updated return in a timely manner and ensure that all necessary corrections are made accurately.
What is ITR-U and Its Purpose?
ITR-U (Income Tax Return - Updated) is a provision introduced under Section 139 of the Income Tax Act, allowing taxpayers to correct mistakes or omissions in their filed Income Tax Returns (ITR). This option provides an extended window for taxpayers to update their returns for up to four years from the end of the relevant assessment year. It is especially helpful for individuals who have made errors in reporting income, claiming deductions, or missed out on necessary filings altogether. The main purpose of ITR-U is to enable taxpayers to rectify any discrepancies, ensuring their tax records are accurate and compliant with the law.
Who Can File ITR-U?
Any taxpayer who has filed an original or belated ITR and realizes that they have made an error, omission, or missed reporting certain details can file ITR-U. This option is particularly useful for individuals who:
Have missed reporting some income (such as interest income, capital gains, etc.)
Have claimed deductions incorrectly or failed to claim eligible deductions
Have made errors in entering figures or reporting incorrect data
Have filed an incomplete return by mistake
ITR-U is available to both individuals and businesses who need to correct their filed returns. However, it can only be filed if no assessment has been completed or no notice for assessment has been issued by the Income Tax Department.
What is the Time Limit for Filing ITR-U?
The time limit for filing an ITR-U is four years from the end of the relevant assessment year. This means that taxpayers can file ITR-U for returns that were due in the past four years, correcting any errors or omissions in those returns. For example, for the assessment year 2020-21, taxpayers have until March 31, 2025, to file an updated return under ITR-U. It’s important to note that ITR-U can only be filed within this time window, so it’s crucial to act within the prescribed period.
How to File ITR-U?
Filing ITR-U is similar to filing an original or revised return but with the added provision of updating the previously filed return. Here’s how you can file an ITR-U:
Login to the Income Tax Portal: Access the Income Tax Department’s e-filing portal using your PAN and password.
Select ITR-U Option: Once logged in, choose the 'ITR-U' option to update your return.
Fill in the Correct Information: Correct any errors, such as missing income or deductions, and fill out the necessary fields.
Submit the Updated Return: Review the information thoroughly, and submit the updated return. You’ll be required to pay any additional taxes that arise due to the corrections.
E-Verify the Return: After submitting the updated return, complete the e-verification process to confirm the authenticity of the filing.
By following these steps, you will be able to correct your previously filed ITR and ensure compliance with the Income Tax Department.
What Are the Penalties for Filing ITR-U?
While ITR-U provides an opportunity to correct errors and avoid penalties for unintentional mistakes, there are penalties associated with filing under this provision. The penalties include:
Late Payment Penalty: If there are additional taxes due as a result of the update, a penalty for late payment will apply. This penalty is calculated based on the time the taxes remain unpaid.
Interest on Due Tax: If any tax is due as a result of the corrected return, interest will be levied on the outstanding amount. This interest is calculated under Section 234A of the Income Tax Act.
Additionally, while there is no specific penalty for filing an ITR-U itself, the Income Tax Department may impose penalties for underreporting income or misrepresentation, especially if it is found to be a deliberate attempt to evade taxes. Therefore, it is essential to ensure that the corrections are accurate and complete.
How Does ITR-U Differ from Belated and Revised Returns?
ITR-U is distinct from both belated and revised returns, primarily in terms of its timing and purpose.
Belated Return: A belated return is filed after the due date but before the end of the assessment year. It can be filed for any reason, but it does not allow for any correction of errors or omissions in the original return.
Revised Return: A revised return is filed to correct errors in the original return, such as incorrect details, missed deductions, or missing income. It can be filed any time before the completion of the assessment or before the notice of assessment is issued.
ITR-U: ITR-U provides an extended window (up to four years) to update the previously filed return, correcting any mistakes or omissions. It allows the taxpayer to make changes even after the assessment has been completed, provided it is within the specified time limit. ITR-U can also be filed if no assessment has been initiated.
How to Avoid Income Tax Notices While Correcting Returns
To - avoid income tax notices while correcting returns, taxpayers must be diligent about providing accurate and comprehensive information. Here are some tips to help you:
Double-Check Your Updated Information: Before submitting your ITR-U, make sure all errors are corrected, and income and deductions are accurately reported.
File Within the Time Limit: Ensure that you file ITR-U within the four-year window to avoid issues with late submission.
Ensure Full Tax Payment: Any tax payable as a result of the updated return should be paid immediately to avoid interest or penalties.
Consult with Tax Professionals: If you’re unsure about the changes, it’s advisable to consult with a tax consultant or CA to ensure compliance and minimize the risk of errors.
Conclusion
Filing ITR-U under Section 139 offers an important opportunity for taxpayers to correct previously filed returns within a four-year window. Although this provision allows for an extended time frame, it comes with penalties for late payment and interest charges on any outstanding tax. By ensuring accurate reporting and timely filing, taxpayers can avoid complications and notices from the Income Tax Department. Using platforms like TaxBuddy can make this process much easier by offering expert guidance and AI-powered assistance, ensuring that the entire process—from filing to verification—is handled smoothly and efficiently.
FAQs
Q1: Can I file ITR-U to claim a refund?
No, ITR-U cannot be used to claim refunds. It is designed to report additional income that was missed in the original filing and pay any extra tax due. The form is intended to correct mistakes, update income details, and ensure full tax compliance. If you wish to claim a refund, you must file your original return or a revised return (Section 139(5)).
Q2: How many times can I file an ITR-U for the same assessment year?
ITR-U can be filed only once per assessment year. This form is intended for taxpayers to report income that was left out in the initial filing, but it can only be done once per year. After filing the ITR-U, if additional income needs to be reported, the taxpayer would need to make adjustments in future assessments.
Q3: What happens if I miss the ITR-U filing deadline?
If you miss the deadline for filing ITR-U, you lose the opportunity to correct the return for that assessment year using this form. You may also face penalties for non-compliance or delayed filing. In some cases, the Income Tax Department may issue notices for discrepancies, and you could be liable for additional taxes or interest. Therefore, it is important to file ITR-U within the stipulated deadline to avoid complications.
Q4: Can ITR-U be filed for returns filed under Section 139(1)?
Yes, ITR-U can be filed for returns originally filed under Section 139(1) or any other applicable sections, as long as the eligibility conditions for ITR-U are met. This includes cases where income was inadvertently omitted, and taxpayers wish to disclose additional income to the Income Tax Department. It helps rectify mistakes from the original filing and ensures that the correct tax is paid.
Q5: How does TaxBuddy help in filing ITR-U?
TaxBuddy simplifies the process of filing ITR-U by offering expert assistance, an intuitive mobile app, and step-by-step guidance. The platform helps calculate any additional taxes due, file the ITR-U correctly, and provide comprehensive support to ensure timely compliance. TaxBuddy's mobile app enables users to easily report any missed income, ensure the accuracy of their tax filings, and avoid receiving notices from the Income Tax Department. With its AI-driven tools and expert resources, TaxBuddy ensures that users can correct their returns efficiently and avoid penalties.
Q6: What is the deadline for filing ITR-U?
The deadline for filing ITR-U is typically the end of the relevant assessment year, usually December 31 of the year following the assessment year. For example, if you're correcting your ITR for FY 2022-23, you must file ITR-U by December 31, 2023. After this date, you lose the opportunity to file ITR-U for that assessment year. It’s essential to meet this deadline to avoid penalties and further scrutiny from the tax authorities.
Q7: Is there a penalty for filing ITR-U late?
Yes, there can be a penalty if you file ITR-U after the deadline. Late filing can result in penalties and interest on the additional tax owed. The penalty can range depending on the extent of the delay, and interest will be charged under Section 234A, 234B, or 234C based on how late the payment is. It is advisable to file the form on time to avoid these additional costs.
Q8: Can I make changes to my ITR-U after submission?
Once ITR-U is submitted, you cannot make changes to it directly. However, if there are any mistakes or if the Income Tax Department requests additional clarifications, you can submit a revised version of the return using the same form or follow the instructions issued by the department. Any discrepancies identified by the department may be corrected by filing further documentation as requested.
Q9: Can I use ITR-U if I filed an incorrect tax return?
Yes, ITR-U is specifically designed for situations where a taxpayer has filed an incorrect return or missed reporting certain income. If you realize that you did not report some income in your original ITR, you can use ITR-U to disclose the missing income and pay the additional tax. The form helps ensure full compliance with tax laws.
Q10: How do I know if I am eligible to file ITR-U?
You are eligible to file ITR-U if you have missed reporting income in your original return or made a mistake in the filed return. The form is available to taxpayers who need to correct their filed tax returns and disclose any additional income that was omitted. Eligibility also depends on the tax liabilities and the timing of the return submission, so it's important to verify with the Income Tax Department or a tax consultant whether ITR-U is applicable to your case.
Q11: What type of income can be reported using ITR-U?
ITR-U can be used to report any income that was omitted in the original tax return, including interest income, income from capital gains, rental income, or any other taxable income. The form helps taxpayers disclose these missed earnings and ensure compliance with tax laws. However, it's essential to report only legitimate and taxable income, and the details should be properly supported by documents like bank statements or other relevant proofs.
Q12: How does TaxBuddy simplify the ITR-U filing process?
TaxBuddy offers a user-friendly platform to make the ITR-U filing process straightforward. It provides real-time calculations of additional taxes due, ensures accurate reporting of omitted income, and guides users through the process. TaxBuddy also helps keep track of deadlines, generates error-free returns, and offers expert support if further clarification is needed. With the TaxBuddy mobile app, users can file ITR-U on the go, ensuring they don’t miss the filing deadline and avoid complications with the Income Tax Department.
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