Understanding ITR U: Updating Your Tax Return
Updated: Apr 24
Let us start the blog by unfolding what is ITR U, its advantages, and its attributes.
An "updated return" refers to a specific type of income return that falls under section 139(8A) of the Income Tax Act 1961, and requires the use of Form ITR U. This option is particularly beneficial for individuals who have either failed to file their income tax returns or have submitted incorrect or misleading information in their initial filings.
The ITR U form enables taxpayers to carry out a variety of actions, such as submitting income returns that were not previously filed, rectifying any erroneous information in their income tax filings, modifying the income head, decreasing the carry-forward loss, decreasing the unabsorbed depreciation, reducing income tax credit, and many more.
In other words, it is a form that provides taxpayers with the opportunity to amend mistakes or exclusions on their income tax returns for up to two years following the conclusion of the relevant assessment year. This allows individuals to update their return even if they failed to report some of their income. This applies regardless of whether the taxpayer originally filed their ITR on time, after the due date, or not at all for a given financial year.
The Budget for the fiscal year 2022-23 has introduced provisions allowing taxpayers to amend their income tax returns within a two-year window, provided that they pay the required taxes. This measure is intended to assist taxpayers in correcting any errors or omissions. Nevertheless, there is a restriction to filing only one updated return per assessment year.
Previously, if the Income Tax (IT) department identified any unreported income by the taxpayer, it would undergo a prolonged adjudication process. The new proposal is anticipated to rebuild trust in the taxpayer.
Let's unfold the ITR U applicability:
Individuals who have made errors or omissions in any of the following tax returns have the option to file an updated return:
Original return of income
Belated return and revised return
An updated return can be submitted in the following circumstances:
If the taxpayer did not file the return, and missed the filing deadline and belated return deadline
If the income did not get reported accurately
If the taxpayer selected the wrong head of income
If tax got paid at the wrong rate
To decrease the carried forward loss
To decrease the unabsorbed depreciation
To decrease the tax credit under section 115JB/115JC
For each assessment year (AY), a taxpayer can only file one updated return.
The following situations dismiss the usage of ITR U:
If an updated return has already gotten filed
For submitting a nil return or a loss return
To claim or increase the refund amount
If the updated return would result in a lower tax liability
If search proceedings have been initiated under section 132 against the taxpayer
If a survey has gotten conducted under section 133A
If books, documents, or assets have gotten seized or requested by the Income Tax authorities under section 132A
If an assessment, reassessment, revision, or re-computation is pending or completed.
If there is no additional tax liability (if the tax liability has been adjusted with TDS credit or losses and there is no further tax liability, an updated ITR cannot be filed).
Let us get a fair idea about how to file ITR U entails and ITR U notifications.
Here's general information for Part A under Section 139(8A):
The following information is required in Part A: PAN, Aadhaar Number, Assessment Year, whether a return has been previously filed for this assessment year, and if yes, whether it was filed under section 139(1) or other sections. If applicable, the form filed, acknowledgment or receipt number, and the date of filing the original return must be provided. Besides, taxpayers are mandated to indicate their eligibility for filing an updated return pertaining to the conditions established in the first, second, and third provisos to section 139(8A). Alongside this, taxpayers need to pick the appropriate ITR form for updating their income. This gets followed by indicating whether taxpayers are filing the updated return during the period of up to twelve months from the end of the relevant assessment year or in the middle of twelve to twenty-four months (from the end of the relevant assessment year). Finally, if taxpayers are filing the updated return to reduce carried forward loss or unabsorbed depreciation or tax credit, they will need to indicate the assessment years affected.
Let's delve into Part B: Computation of Total Income and Tax Payable in Updated Return
(A) Specify the head of income for which additional income is being reported in the Updated Return.
(B) Provide the total income as per the last valid return, only if the Income Tax Return has been filed previously.
Enter the total income as per Part B-TI.
The payable amount, if any, is to be taken from the "Amount payable" section of Part B-TT of the Updated ITR.
The refundable amount, if any, is to be taken from the "Refund" section of Part B-TTI of the Updated ITR.
Enter the amount payable based on the last valid return, if applicable.
(i) Specify the refund claimed in the last valid return, if any.
(ii) Enter the total refund issued in the last valid return, including any interest received under section 244A.
Provide the fee for default in furnishing the return of income under section 234F.
Enter the regular assessment tax, if applicable.
Compute the aggregate liability on additional income.
Calculate the additional income-tax liability on updated income at 25% or 50% of the difference between lines 9 and 7.
Determine the net amount payable by adding lines 9 and 10.
Provide the tax paid under section 140B.
Calculate the tax due by subtracting line 12 from line 11.
Up next is the information related to tax payments made only for the updated return filed under section 140B. This includes details of any advance tax, self-assessment tax, or regular assessment tax paid, for which credit has not been claimed in the earlier return, and which cannot be claimed again under section 140B (2). Also, any relief claimed under section 89, which was not claimed in the earlier return, should be mentioned. It should be noted that such relief cannot be claimed again under section 140B (2).
Form 139(8A) can get used by taxpayers to file an updated tax return through the Income tax portal, but it can only be done offline by generating a JSON file with the help of a return preparation tool. The IT department brings you an Excel-based ITR U utility to prepare and generate the JSON file. However, it requires the .NET framework to run its macros.
Other significant miscellaneous pieces of information:
When filing ITR U, if it is submitted within 12 months after the end of the relevant assessment year (AY), the taxpayer will be required to pay an additional tax of 25% along with interest. If the ITR U is filed within 24 months after the end of the relevant AY, the taxpayer will be required to pay an additional tax of 50% along with interest.
ITR U can be validated using different methods depending on the type of case:
1) For non-tax audit cases, an electronic verification code (EVC) can be used.
2) For tax audit cases, a digital signature certificate (DSC) can be used.
To calculate the income tax on an updated return, Section 140B of the Income Tax Act 1961 outlines a simple process. The total income tax liability can be calculated by adding the payable tax, interest, payable fees for non-filing of Income Tax (if any), and the payable amount as additional tax (for taking the benefit of Section 139(8A)).
After calculating the total income tax liability, the TDS (Tax Deducted at Source)/TCS (Tax Collected at Source)/advance tax/tax relief, etc., can be deducted from it to arrive at the net tax liability under Section 140B.
Are there any benefits of filing an Updated Return? Let us explore them!
1) Taxpayers are allowed an extended time of 24 months to file their Income Tax Returns beyond the deadline for filing the Original ITR, Belated ITR, and Revised ITR. This enables taxpayers to report any income that may have been missed earlier and pay taxes on it. By doing so, they can reduce the likelihood of future tax notices and legal disputes.
2) Filing an updated return may result in lower tax liability and penalty compared to situations where proceedings are initiated for undisclosed income or income escaping assessment.
Is it possible to claim a refund by filing the updated return?
No, it is not possible to claim a refund by filing the updated return if it results in a decrease in tax liability, an increase in a tax refund, or a claim of loss.
When are the due dates for filing an Updated Return for AY 2022-23 and AY 2023-24 and what is itr u late fees?
According to the Income Tax Act, the due date for filing an Updated Return is 24 months from the end of the relevant Assessment Year. Henceforth, the due date for filing an Updated Return in Form ITR U for AY 2022-23 is 31st March 2025. Correspondingly, the due date for AY 2023-24 is 31st March 2026.
However, you will be required to pay a penalty of Rs. 5000 if you file your ITR after the due date.
Is it permissible to submit two ITR U for the same financial year?
A taxpayer can only submit one Updated ITR for a Financial Year, so it should be done with caution.