Correcting Filed Returns with ITR U Under Section 139: A Guide to Missed Deductions and Income Reporting
- Asharam Swain
- May 16
- 9 min read
In cases where taxpayers have made errors or omitted deductions while filing their income tax returns, the Income Tax Department offers a solution through ITR-U under Section 139. This provision allows individuals to update their previously filed returns, correct errors, report missed income, and pay any additional tax liabilities, albeit with penalties. Let us explore the details of ITR-U, covering when it can be used, the filing timeline, penalties, and the specific deductions or income that can be corrected.
Taxpayers who missed reporting income or claiming eligible deductions can utilize ITR-U to bring their returns up to date. The process involves paying any due tax along with penalties, but offers a chance to rectify past mistakes without facing legal repercussions.
Table of Contents
What is ITR-U and When to Use It?
ITR-U, or Updated Income Tax Return, is a provision under Section 139(8A) of the Income Tax Act that allows taxpayers to rectify mistakes or omissions in their previously filed income tax returns. This option was introduced to promote voluntary compliance and enable taxpayers to report missed income or deductions, ensuring the payment of any additional tax liabilities. The key feature of ITR-U is that it provides a chance to update returns even after the deadline for filing the original return has passed, with certain conditions.
ITR-U can be used in the following scenarios:
Missing the Original Filing Deadline: If you failed to file the original return on time, ITR-U allows you to correct this omission, even if you missed the opportunity to file a belated return.
Unreported Income: If, after filing your original return, you discover that some of your income was missed, such as interest income, freelance earnings, or income from other sources, you can file ITR-U to report this unreported income.
Missed Deductions: If you neglected to claim deductions that you're eligible for, such as deductions under Section 80C, 80D, or any other applicable section, ITR-U allows you to correct your return. However, it’s important to note that while ITR-U can correct income, it cannot be used to reduce tax liabilities by claiming additional deductions beyond those already reported.
The purpose of ITR-U is to provide taxpayers with an opportunity to correct errors without facing the same penalties as they would for non-compliance. It's designed for those who need to amend their filings in cases of unreported income, errors, or omissions.
Timeline and Deadlines for Filing ITR-U
The filing deadline for ITR-U has been significantly extended with the Budget 2025 amendment. Previously, taxpayers had only a 2-year window from the end of the relevant assessment year to file an ITR-U. However, the new extension allows taxpayers to file an ITR-U within a 4-year period from the end of the relevant assessment year. This new deadline grants individuals and businesses more time to make corrections to their previously filed returns.
Extended Filing Deadlines
For example, the filing deadlines for various financial years have been adjusted as follows:
Financial Year | Assessment Year | Previous Deadline (2 years) | New Deadline (4 years) |
FY 2020-21 | AY 2021-22 | 31 March 2024 | 31 March 2026 |
FY 2021-22 | AY 2022-23 | 31 March 2025 | 31 March 2027 |
FY 2022-23 | AY 2023-24 | 31 March 2026 | 31 March 2028 |
FY 2023-24 | AY 2024-25 | 31 March 2027 | 31 March 2029 |
These extended deadlines give taxpayers more time to address missed income or deductions, ensuring they can correct their returns without facing immediate penalties. It’s important for taxpayers to remember that ITR-U cannot be filed beyond these deadlines, and any failure to file within the extended period may result in significant legal and financial consequences.
Penalty Structure for Filing ITR-U
The penalty structure for filing ITR-U increases progressively based on how late the return is filed. This encourages taxpayers to correct their returns as quickly as possible to minimize the financial burden. The penalty structure is as follows:
Within 12 months: A penalty of 25% of the average tax and interest due.
Within 24 months: A penalty of 50% of the average tax and interest due.
Within 36 months: A penalty of 60% of the average tax and interest due.
Within 48 months: A penalty of 70% of the average tax and interest due.
The penalty is calculated based on the average tax and interest due from the additional income or missed deductions. Filing as early as possible within the 4-year window helps reduce the penalty, making the process more cost-effective for the taxpayer.
Additionally, interest will also be applicable on the delayed payment of taxes. Taxpayers should aim to file their updated returns as soon as they identify errors in order to avoid a higher penalty and additional interest costs.
What Can and Cannot Be Corrected via ITR-U?
ITR-U is a powerful tool for correcting certain types of errors in previously filed returns, but it comes with limitations. Here’s what can and cannot be corrected:
What Can Be Corrected:
Missed Income: If income was left out of the original return (e.g., freelance income, interest income, or business profits), you can use ITR-U to include it and pay the necessary tax.
Unreported Deductions: Certain deductions that were not claimed in the original return can be included in the updated return. However, this applies only to deductions that were genuinely missed, not additional deductions beyond what was originally allowable.
What Cannot Be Corrected:
Refund Claims: ITR-U cannot be used to claim refunds. If you’ve overpaid taxes and are entitled to a refund, this cannot be processed through ITR-U.
Reducing Tax Liability: You cannot use ITR-U to reduce tax liability through further deductions or exemptions that were not part of your original filing.
Carry Forward Losses: Losses that were not claimed earlier cannot be carried forward using ITR-U. For example, capital losses or business losses cannot be adjusted using this method.
Correcting Returns for Past Years (Beyond 4 Years): ITR-U can only be filed within 4 years of the assessment year. Any corrections made after this window will not be accepted.
In essence, ITR-U is designed for taxpayers to report additional income or missed deductions but does not allow for changes that would result in tax reduction or refunds.
How to Correct Missed Deductions and Income Reporting Using ITR-U
Correcting missed deductions or unreported income using ITR-U involves several steps, which are outlined below:
Identify the Missed Income or Deductions: Start by reviewing your original tax return to identify the missed income or deductions. This could be a forgotten source of income or a deduction under sections like 80C, 80D, or others.
Calculate Additional Tax Liability: Once the missed items are identified, calculate the additional tax that would be due based on the new income or deductions.
Compute Interest and Penalties: Based on the delay in filing, compute the interest and penalties applicable. The sooner you file, the lower the penalty and interest.
Make the Payment: Ensure all additional taxes, interest, and penalties are paid before submitting your ITR-U. Payments can be made via theIncome Tax e-filing portal.
File the Updated Return: After making the payment, file the updated return through the official e-filing portal. Make sure to submit it before the deadline to avoid further penalties.
Confirmation: Once the return is filed, you will receive a confirmation of your updated filing. This filing is final for the assessment year, and no further changes can be made under ITR-U for that year.
Following these steps ensures that you are compliant with the tax laws and can avoid harsher penalties or legal consequences for errors in your original return.
Addressing Specific Questions Related to ITR-U
In this section, we’ll address some common long-tail questions regarding the ITR-U filing process:
Can I file ITR-U if I missed the original filing deadline and also missed filing a belated return?Yes, ITR-U can be filed even if you missed both the original and belated filing deadlines, but it will not allow you to claim refunds.
If I have already filed a revised return, can I still file an ITR-U?Yes, you can file an ITR-U after a revised return if there is additional missed income or deductions that need to be corrected, within the 4-year window.
Can I use ITR-U to claim missed deductions like Section 80C or HRA exemptions?No, ITR-U cannot be used to claim or increase deductions; it can only report additional income and pay the corresponding tax.
What happens if I file ITR-U after the 4-year deadline?You will not be able to file ITR-U after the 4-year deadline, and may face penalties or legal action for non-compliance.
Is there any limit on how many times I can file ITR-U for the same assessment year?ITR-U can only be filed once per assessment year, and once it’s filed, no further updates can be made for that year.
Conclusion
ITR-U provides taxpayers with the ability to correct their filed returns and ensure compliance by reporting missed income or deductions, paying any additional dues with penalties, and avoiding future legal complications. TaxBuddy offers seamless support for those seeking assistance with ITR-U filing, providing expert guidance and a user-friendly app for hassle-free tax management.
For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
Frequently Asked Question (FAQs)
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides both self-filing and expert-assisted options for ITR filing, giving taxpayers the flexibility to choose the plan that suits their preferences and comfort level. Whether you prefer to file your return independently with guidance or would like expert support every step of the way, TaxBuddy ensures a seamless experience tailored to your needs.
Q2. Which is the best site to file ITR?
The best site to file your ITR depends on your specific requirements. If you're looking for a straightforward and user-friendly platform with expert support, TaxBuddy stands out. It provides an intuitive interface, simplifying the process while offering assistance from tax professionals to ensure you meet all the necessary compliance requirements.
Q3. Where to file an income tax return?
Income tax returns can be filed directly through the Income Tax Department’s official e-filing portal. Alternatively, platforms like TaxBuddy provide a more guided approach, with user-friendly tools and expert support to make the process quicker and error-free.
Q4. What is the difference between ITR-U and a revised return?
ITR-U is filed after the assessment year has concluded, allowing you to report additional income or correct errors without claiming refunds. In contrast, a revised return can be filed within the assessment year to fix mistakes or omissions, and it allows you to claim refunds. Essentially, ITR-U serves to correct errors after the final deadline, whereas revised returns are meant for corrections within the filing year.
Q5. Can ITR-U be used to reduce my tax liability by claiming missed deductions?
No, ITR-U cannot be used to claim deductions or reduce tax liabilities. It is specifically for reporting additional income that was missed initially, ensuring that the tax due on that income is paid. If you need to claim deductions or reduce tax liabilities, you would need to file a revised return within the assessment year.
Q6. How is the penalty for filing ITR-U calculated?
The penalty for filing an ITR-U increases based on how late the return is filed. The penalties are structured as follows:
25% if filed within 12 months
50% if filed within 24 months
60% if filed within 36 months
70% if filed within 48 months of the assessment year
The later you file, the higher the penalty, which is calculated as a percentage of the additional tax and interest due.
Q7. Can I file ITR-U after filing a revised return?
Yes, ITR-U can be filed after submitting a revised return, but it can only be filed once per assessment year and must be done within the 4-year window from the end of the assessment year. It is a final opportunity to correct any missed income or deductions.
Q8. Does TaxBuddy provide assistance with filing ITR-U?
Yes, TaxBuddy offers comprehensive assistance with filing ITR-U. TaxBuddy's platform allows for easy navigation of the process, ensuring that your updated return is filed correctly, and helps you stay compliant with the tax laws while minimizing penalties. Their expert team is available to guide you through each step.
Q9. Can I file ITR-U if I missed the original filing deadline and also missed filing a belated return?
Yes, even if you missed both the original and belated filing deadlines, you can still file ITR-U. However, it is important to note that you will not be able to claim refunds, and you will need to pay the additional taxes along with penalties for the delayed filing.
Q10. What happens if I file ITR-U after the 4-year deadline?
If you miss the 4-year deadline for filing ITR-U, you will not be allowed to file an updated return under Section 139(8A). This could lead to further penalties, interest, or even legal action for non-compliance, as you are then deemed to have failed to rectify your return within the permitted period.
Q11. Is there a limit on how many times I can file ITR-U for the same assessment year?
ITR-U can only be filed once per assessment year. After filing it, no further corrections or updates can be made under ITR-U for that assessment year.
Q12. Can I use ITR-U to claim missed deductions like Section 80C or HRA exemptions?
No, ITR-U is not designed to claim deductions or reduce tax liabilities. It is only meant for reporting additional income and paying the corresponding tax on it. If you missed claiming deductions like Section 80C or HRA exemptions, those cannot be included in ITR-U.
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