What is an Updated ITR?

As per Income Tax laws, the due date to file ITR u/s 139(1) for FY 21-22 (AY 2022-23) was 31 July 2022. Later, a belated return could be filed upto 31 December 2022 for the assesses who missed filing their income tax return within the original due date. Revised returns were also allowed to be filed within this belated return deadline to rectify errors and omissions made while filing the original ITR.

In the Union Budget 2022, the government introduced the ITR U form for updating income tax returns. The ITR-U form is a rescue for those who have not filed their ITR or made inaccurate and false entries while filing their income tax returns.

ITR-U is a form that allows taxpayers to correct errors or omissions on their ITRs up to two years from the end of the relevant assessment year to update their return. For instance, for the assessment year 2021-22, an updated return can be filed by 31 March 2024 if the taxpayers have missed reporting some income.

Irrespective of whether the taxpayer has filed an original, belated, or revised ITR or has completely missed filing the ITR in a specific financial year.

Who is Eligible to File Form ITR-U?

Any taxpayer can furnish an updated return whether he has furnished/not furnished an original return, revised return, or belated return in case of any omission, error, or wrong statement in his earlier return of income.

An Updated Return can be filed if:

• Return previously not filed
• Income not reported correctly
• Wrong heads of income chosen
• Reduction of carried forward loss
• Reduction of unabsorbed depreciation
• Reduction of tax credit u/s 115JB/115JC
• Wrong rate of tax

What is the Time Limit to File the ITR-U?

The time limit for filing an updated return is 24 months from the end of the relevant assessment year. Hence, in the current financial year 2022-23, updated returns for AY 2020-21 and AY 2021-22 can be furnished.

For example,

For FY 2019-20 (AY 2020-21), an updated return can be filed by 31 March 2023.

Is there any requirement to pay any additional tax?

Late filing is always associated with penalties. One would need to pay an additional 25 percent of the tax and interest due on the income missed to be reported if the return is filed within one year from the end of the relevant assessment year. The penalty gets enhanced to 50 percent of additional tax and interest due if the return is filed after one year and within two years of the relevant assessment year.

For example:-

Who is ineligible to File Form ITR-U?

An Updated Return cannot be filed if:

• If an updated return is the return of loss
• If an updated return reduces Income Tax Liability in the return filed earlier
• If updated return results in the increase of Refund
• If a search has been initiated under section 132
• If books of Accounts or any other documents are requisitioned under section 132A.
• If survey has been conducted under section 133A
• If any proceeding of assessment, reassessment, re-computation or revision is pending or completed for that relevant year
• If Assessing Officer has information against such person under Prevention of Money Laundering Act or Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act or Benami Property Transactions Act or Smugglers and Foreign Exchange Manipulators Act and the same has been communicated to the assessee.
• If the information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return under this subsection.
• Other Notified Persons

How to File Form ITR-U?

ITR-U seeks the following additional details from the taxpayers:

Part A - General Information (ITR-U)
This part of ITR-U seeks general information from taxpayers about filing an updated return. It includes the following:

• PAN
• Aadhaar Number
• Assessment Year
• Whether return previously filed for this assessment year? (Yes/No)
• If yes, Whether filed u/s 139(1) Others
• If applicable, enter form filed, Acknowledgement no. or Receipt No. and Date of filing the original return (DD/MM/YYYY)
• Are you eligible to file an updated return? i.e., a person is not falling in such circumstances wherein an updated return can’t be filed.
• Selecting the ITR form for filing an updated return
• Reasons for updating income. This includes reasons such as returns previously not filed, income not reported correctly, wrong heads of income chosen, etc.
• Are you filing an updated return within 12 months from the end of the relevant AY or between 12 to 24 months from the end of the relevant AY?
• Are you filing an updated return to reduce carried forward loss, unabsorbed dep., or tax credit?

Part B – Computation of updated income and tax payable (ITR-U)

• 1 (A) Head of income under which additional income is being returned as per Updated Return
• 1 (B) Total income as per last valid return (only in cases where the Income Tax Return has previously been filed)
• Total income as per Part B-TI
• The amount payable, if any (To be taken from the ―Amount payable of Part B-TT of the updated ITR)
• Amount refundable, if any (To be taken from ―Refund‖ of Part B-TTI of the updated ITR
• The amount payable on the basis of last valid return (only in applicable cases)
• 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
• Fee for default in furnishing return of income u/s 234F
• Regular Assessment Tax, if any
• Aggregate liability on additional income
• Additional income-tax liability on updated income [25% or 50% of (9-7)]
• Net amount payable (9+10)
• Tax paid u/s 140B
• Tax due (11-12)
• Details of payments of tax on updated return u/s 140B
• Details of payments of Advance Tax / Self-Assessment Tax / Regular Assessment Tax, credit for which has not been claimed in the earlier return (credit for the same is not to be allowed again under section 140B(2) )
  • Note: Credit for the above is not to be allowed again under section 140B(2)
• Relief u/s 89 which is not claimed in earlier return [relief for the same is not to be allowed under section 140B(2)]

How is an Updated Return verified?

ITR-U can be verified through

• Electronic Verification Code (EVC), is given for non-tax audit cases.
• Digital Signature Certificate (DSC) in tax audit cases.