ITR-U: A Complete Guide on Filing Updated ITR

Income tax return for each financial year is to be filed by the prescribed due dates. Belated return can be filed by Dec 31 of the relevant assessment year i.e. the next financial year or completion of assessment, whichever is earlier. The filing window close d thereafter.

This results in 2 problems:

• Taxpayers who had missed filing their ITR, want to file it but are unable to do so.
• In some cases, taxpayers discover some omissions or mistakes in their ITR already filed and want to add/alter some information in it but they are unable to do so after 31 Dec of the next year.

To allow tax payers the flexibility to file/update ITR even after 9 months from end of the relevant financial year, IT dept. under section 139(8A) allows any person to file an Updated Income tax return within 24 months from the end of the relevant assessment year. This concept was introduced in the Union Budget 2022 to enhance tax compliance without invoking legal consequences.

It is important for the taxpayers to understand the meaning and applicability of ITR-U.

What is ITR-U?

ITR-U or Updated ITR is to be filed in Form ITR-U which has been prescribed under Rule 12AC of the Income Tax Act. In enables a taxpayer to file/update the tax returns within 2 years from the relevant assessment year. For example, Updated ITR for AY 2023-24 can be submitted till March 31, 2026.

Who is eligible to file ITR-U?

To be considered eligible to file ITR-U, the taxpayer is required to fill in the reasons for updating the return. The taxpayer can furnish an updated, revised, or belated return with omission, error, or wrong statement in the earlier return of income, putting in the following reasons.

• In case the return has not been filed previously.
• When the income has not been reported correctly.
• In the case of wrong selection of head of income.
• Where the wrong rate of tax has been applied.
• For the reduction of unabsorbed depreciation.
• For the reduction of carried forward losses.
• For the reduction of tax credit u/s 115JB& 115JC.

Who is not eligible to file ITR-U?

Under the given situations, filing of ITR-U is not applicable.

• In case the updated return is a return of the loss.
• Increase in refund/claiming of refund, resulting from the updated return.
• If the total tax liability is reduced from the return filed earlier.
• Additional Losses are to be adjusted against the income.
• Search/survey/prosecution proceedings are initiated for that A.Y. under section 132.
• In case the books of accounts have been called for under section 132.
• Assessment/reassessment/ revision is pending or completed for the A.Y.
• The AO has information against such person under the Prevention of Money Laundering Act or Black Money, Tax Act or Benami Property Transactions Act, or Smugglers and Foreign Exchange Manipulation Act, and the same has been reported to the assessee.
• In the case of other persons to be notified by the Board.

What is the format of ITR-U?

ITR-U Form is comprised of two parts, part A and part B.

Part A: General Information-139(8A)

(A1) PAN: The PAN details of the assessee are required to be furnished.

(A2) Name: The name of the assessee is required to be filled in.

(A3) Aadhaar Number: The Aadhaar No. of the assessee is required to be furnished.

(A4) Assessment Year: The assessment year for which the assessee is eligible to file an ITR-U is required to be filled.

(A5) Whether return previously filed for this assessment year?: Select the option as Yes or No for the previously filed return.

(A6) If yes, Whether Filed u/s 139 (1) or Others: Select the section under which the previous return has been filed.

(A7) If applicable, enter form filed, Acknowledgement no. or Receipt No. and Date of filing the original return (DD/MM/YYYY): Enter the acknowledgment no. and date on which the return has been filed.

(A8) Are you eligible for filing an updated return as per the conditions laid out in the first, second, and third provisos to section 139(8A)? (Yes/No): Select the option as Yes or No to verify whether you are eligible to file an ITR as per section 139(8A)

(A9) Please choose the ITR form for updating your income (ITRs 1-7 to be selected from the drop-down and filled as per the details made available by the e-filing utility – see instruction): Select the relevant ITR Form from the dropdown.

(A10) Select the Reasons for filing the ITR- U: The relevant reason for filing the ITR- U return is to be selected.

(A11) Are you filing the updated return during the period of up to 12 months from the end of the relevant assessment year or between 12 -24 months from the end of the relevant assessment year?: Select the period of filing of ITR-U.

(A12) (a) Are you filing the updated return to reduce carried forward loss or unabsorbed depreciation or tax credit? Yes/No

(A12) (b) If yes, please specify the assessment years were carried forward loss or unabsorbed depreciation or tax credit is being affected because of this updated return: Select whether the effect was in the revised return or in the updated return.

Part B: ATI Computation of Total Updated Income and Tax Payable

1 (A) Head of income under which additional income is being returned as per Updated Return: Enter the amount in the relevant head of income if additional incomes are there that need to be shown in the updated ITR or ITR-U.

1 (B) Total income as per last valid return (only in cases where the Income Tax Return has previously been filed): Enter the total income as per the schedule TI.

2. Total income as per Part B-TI: Enter the Amount payable, if any that needs to be shown in Part B-TTI.

3. The amount payable, if any (To be taken from the ―Amount payable of Part B-TT of the updated ITR): Enter the Amount payable, if any that needs to be shown in the Part B-TTI.

4. Amount refundable, if any (To be taken from ―Refund‖ of Part B-TTI of the updated ITR: Mention the details of any amount refundable as under part B-TTI of ITR-U.

5. The amount payable on the basis of last valid return (only in applicable cases): Enter the amount payable on the basis of the last valid return.

6. (i) Refund claimed as per last valid return if any (Please see instruction)

6. (ii) Total Refund issued as per last valid return, if any (including interest u/s 244A received: Enter the Refund amount claimed in the last return.

7. Fee for default in furnishing return of income u/s 234F: Enter the Amount of Late Fee u/s 234F if any.

8. Regular Assessment Tax, if any: Enter the regular assessment tax amount if payable.

9. Aggregate liability on additional income: Enter the aggregate liability amount on the additional income.

10. Additional income-tax liability on updated income [25% or 50% of (9-7)]: At this point, additional amount of tax will be calculated @ 25% or 50%
25% in case of the updated ITR is filed within 12 months and 50% in case the updated ITR is filed after 12 months but before 24 months.

11. Net amount payable (9+10): Enter the net amount payable including the aggregate amount and the additional tax amount paid.

12. Tax paid u/s 140B: Enter the tax amount paid for the additional income.

13. Tax due (11-12): Enter the tax due amount.

14. Tax Payments (Only as per Updated Return): Enter the Tax amount paid in the challan for the self-assessment tax.

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What is the time limit to file ITR-U?

The time limit for filing ITR-U is 24 months from the end of the relevant assessment year, as per the income tax provisions related to ITR-U, applicable from 1st April 2022. This implies that in the current financial year 2023-24, you can file ITR-U for AY 2021-22 and AY 2022-23.

Is there an additional tax payment requirement for ITR-U filing?

Please note that an Updated ITR cannot be filed if there is no additional tax liability. That is why this return must contain the details of additional tax deposited.

Further, the taxpayer is required to pay an additional 25% interest on the tax due for filing the updated ITR within the preceding 12 months. This interest can rise to 50% in case the updated ITR is filed after the 12-month period but before the completion of 24 months from the end of the relevant Assessment Year.

A taxpayer updating the returns for FY 2020-21 (AY 2021-22) will need to pay the tax due and interest along with an additional 50% of tax and interest.

How to verify the updated return?

The updated ITR can be verified only by using a Digital Signature Certificate (DSC). Alternatively, an Electronic Verification Code (EVC) can be used in non-tax audit cases.

In a Nutshell

Updated ITR allows a taxpayer to file/alter an ITR after the filing window closes. However, it is unfair that it can be filed only where tax liability arises. That is a taxpayer cannot use it to reduce tax liability in an ITR already filed. Not only that, additional interest is payable depending on the period of delay.

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