Updated Return (ITR-U) u/s 139(8A) - A Comprehensive Guide

1. Introduction

The Updated Return (ITR-U) was introduced in the Union Budget 2022 under Section 139(8A) of the Income Tax Act, 1961. This provision allows taxpayers to correct errors, declare undisclosed income, and file returns if missed earlier, even after the belated and revised return deadlines.

1. However, ITR-U cannot be used to claim refunds or reduce tax liability.

2. Taxpayers must pay an additional tax of 25% or 50% based on timing.

This guide explains eligibility, filing process, penalties, legal aspects, examples, and FAQs to help you understand the Updated Return mechanism.

2. What is an Updated Return (ITR-U)?

An Updated Return (ITR-U) allows taxpayers to rectify mistakes or report additional income in their previously filed returns. It can also be used by taxpayers who missed filing their ITR altogether.

Key Features of ITR-U

• Can be filed within 24 months from the end of the relevant Assessment Year (AY).
• Available to individuals, HUFs, firms, LLPs, and companies.
• Cannot be filed to increase a refund or decrease tax liability.
• Additional tax (penalty) of 25% or 50% applies based on the timing of filing.

3. Who Can File an Updated Return?

Eligible Taxpayers

• Individuals, HUFs, Companies, Firms, LLPs, and Others
• Those who missed filing ITR before the due date.
• Those who underreported income in their previously filed return.
• Taxpayers who wrongly claimed deductions or exemptions.
• Those who made errors in loss adjustment or tax calculations.

Cases Where ITR-U Cannot Be Filed

1. If it results in a reduced tax liability.
2. If it is being used to increase a refund.
3. If a search or survey has been conducted under Sections 132 or 133A.
4. If prosecution proceedings have already been initiated.
5. If it involves black money or foreign income/assets.
6. Time Limit for Filing an Updated Return
7. Additional Tax (Penalty) on Updated Return

Example:

A taxpayer forgot to report ₹2,00,000 additional income in AY 2023-24. The additional tax payable on this income is ₹30,000.

1. If filed within 12 months, additional tax = ₹7,500 (25%).

2. If filed between 12 to 24 months, additional tax = ₹15,000 (50%).

6. How to File an Updated Return (ITR-U)?

Step-by-Step Process

Step 1: Log in to the Income Tax Portal

1. Visit https://www.incometax.gov.in.
2. Log in using PAN/Aadhaar and password.

Step 2: Select 'File Income Tax Return'

• Choose the Assessment Year (AY) for which you want to file an updated return.

Step 3: Select ITR Form & ITR-U

1. Choose the correct ITR form (ITR-1, ITR-2, ITR-3, etc.).
2. Select ITR-U (Updated Return).

Step 4: Provide a Reason for Updating the Return

1. Income not reported correctly.
2. Wrong tax rate applied.
3. Reduction of carried forward loss or unabsorbed depreciation.
4. Any other reason.

Step 5: Compute Tax and Pay Additional Tax

• Use the Income Tax Calculator to compute tax liability.
• Pay the additional tax, penalty, or interest.

Step 6: Validate & Submit

• Verify the return using Aadhaar OTP, DSC, or Net Banking.
• Submit the return and download the acknowledgement receipt.

7. Frequently Asked Questions (FAQs) on Updated Return (ITR-U)

Q1: Can I file an Updated Return if I missed filing my original return?

Yes, you can file ITR-U even if you missed the original due date.

Q2: Can I use ITR-U to claim a refund?

No, ITR-U cannot be used to claim refunds or reduce tax liability.

Q3: Is there any penalty for filing an Updated Return?

Yes, an additional tax of 25% or 50% of the unpaid tax is applicable.

Q4: Can I file multiple Updated Returns for the same assessment year?

No, only one Updated Return can be filed for a particular AY.

Q5: What happens if I don't pay the additional tax while filing ITR-U?

The ITR-U will not be processed unless the additional tax is paid.

Q6: Can I file an Updated Return if I have received a tax notice?

Yes, unless the notice involves search, survey, or prosecution proceedings.

Q7: How do I check the status of my Updated Return?

You can track your return status on the Income Tax e-Filing Portal under the "View Returns/Forms" section.

Q8: Will ITR-U be subject to scrutiny by the IT Department?

Not necessarily, but if discrepancies exist, the IT Department may conduct further investigation.

Q9: Can I file ITR-U to correct my bank account details?

No, ITR-U is only for income-related corrections, not for personal details.

Q10: What is the penalty if I fail to file ITR-U despite underreporting income?

If undisclosed income is later detected by the department, you may face:

• 100%-300% penalty on tax evasion
• Interest under Section 234B & 234C
• Prosecution under Section 276CC

8. Key Takeaways

• ITR-U allows taxpayers to correct errors or omissions within 24 months.
• Cannot be used to claim refunds or reduce tax liability.
• Additional tax of 25% or 50% applies based on the timing of the filing.
• Helps taxpayers avoid litigation and penalties by voluntarily rectifying mistakes.

9. Conclusion

The Updated Return (ITR-U) under Section 139(8A) is a great opportunity for taxpayers to rectify their mistakes and avoid penalties. However, it comes with a cost (additional tax and interest).

Tip: Always file your ITR correctly and on time to avoid unnecessary penalties!