The ITR-U (Updated Income Tax Return) provision offers taxpayers in India an opportunity to fix errors or omissions in their previously submitted income tax returns (ITRs). Introduced in the Union Budget 2022, this scheme permits taxpayers to file an updated return within 24 months from the end of the relevant assessment year.
This new initiative aims to encourage voluntary compliance by allowing taxpayers to update or file their ITRs upon payment of additional taxes, addressing mistakes or omissions. The updated return provisions are governed under Section 139(8A) and Section 140B of the Income Tax Act.
This section states that if an ITR is filed late, or not at all, the taxpayer must pay a simple interest of 15% per annum. This interest is calculated from the day after the specified due date until the return filing date or, in cases of non-filing, until the assessment completion date under Section 144.
Taxpayers filing an updated return under Section 139(8A) must pay an additional tax equal to 25% of the aggregate tax and interest due. This rate applies if the updated return is filed within 12 months from the end of the relevant assessment year. For returns filed after 12 months but within 24 months, the additional tax rate increases to 50%.
This scheme aims to reduce litigation, rectify errors, and promote voluntary compliance among taxpayers.
Anyone can file an updated return within 24 months from the end of the relevant assessment year, irrespective of whether an original, revised, or belated return was previously filed under Section 139. Updated returns can be filed in the following cases:
The original return was not filed.
Income was not reported correctly.
Wrong heads of income were selected.
Carried forward losses need to be reduced.
Unabsorbed depreciation needs adjustment.
Tax credits under Sections 115JB/115JC need revision.
Incorrect tax rates were applied.
An updated return cannot be filed if it:
Is a Nil return or a return of loss.
Reduces the total tax liability based on the original return.
Results in or increases a refund from the original return.
Relates to cases involving search and seizure or prosecution proceedings.
Taxpayers must choose their tax regime (old or new) within the due date prescribed under Section 139(1). Once selected, the regime cannot be changed after the due date. This restriction applies to both updated returns and regular filings.
Here are the steps to file an updated return:
Download the Utility: Download the ITR-U Excel utility from the Income Tax Department’s portal.
Enter Details: Fill in the relevant details, such as income adjustments, reasons for updating, and additional tax calculations.
Generate JSON File: After completing the form, generate a JSON file.
Upload the File: Log in to the e-filing portal, upload the JSON file, and submit the updated return.
Pay Additional Tax: Calculate and pay the additional tax liability before submission.
The introduction of the ITR-U scheme reflects the government’s efforts to simplify tax compliance and encourage voluntary corrections. By allowing taxpayers to address past mistakes without severe penalties, this initiative promotes a transparent and efficient tax system while reducing litigation.
How can we help? *
