In India, an updated income tax return (ITR-U) is a revised version of a taxpayer’s original ITR filed for a particular financial year. The concept allows taxpayers to correct any mistakes or omissions in their original return.
Therefore, to file an updated income tax return in India, the taxpayer must have filed an original return for that financial year.
The updated income tax return can address issues like under reported income, missed deductions, or other mistakes. It’s a good way to rectify any discrepancies and ensure compliance with tax regulations.
It’s advisable to file the updated ITR as soon as discrepancies are noticed to minimize any potential penalties or interest.
Who can file an updated income tax return?
You can file an updated income tax return if you realize there was an error or you missed reporting certain income after your original return was filed.
In India, following categories of taxpayers can file an updated income tax return:
- Individual
- Hindu Undivided Family (HUF)
- Companies
- Partnerships
- Any Taxpayer with Correctable Errors
Any taxpayer who realizes that they need to correct or add information after filing their original return is eligible to file an updated income tax return.
This means error or omission of certain income in original, revised and belated return can get corrected by filing an updated ITR within the time limit allowed.
Time limit to file updated income tax return
An updated ITR can typically be filed within two years from the end of the relevant assessment year.
For the financial year 2023-24, for which assessment year 2024-25 ends on March 31, 2025, the last date to file an updated income tax return would be 31st March, 2027.
It’s advisable to file the updated return as soon as discrepancies are noticed to minimize any additional taxes, potential penalties and/or interest.
Form for filing updated income tax return
The updated income tax return in India is filed using Form ITR-U.
ITR-U form was introduced specifically for taxpayers who wish to file an updated ITR to correct any mistakes or omissions in their original return.
You must choose the option indicating filed u/s 139(8A), it shows that the return is an updated return when filing ITR-U on the e-filing portal of the Income Tax Department.
Additional taxes on updated income tax return
When filing an updated income tax return in India that reflects additional income, taxpayers may be liable to pay certain additional taxes.
If the updated return results in higher taxable income, in addition to the normal tax, you need to pay an additional tax of 25% or 50% of the tax amount depending on when the taxpayer has filed the updated return.
If the updated return is filed within 12 months from the end of the relevant assessment year, then additional taxes are 25%. If it’s filed within 24 months from the end of the assessment year, the additional taxes are 50%.
Penalties and interest
If the updated return results in additional tax payable, interest and penalties may apply.
If you owe additional tax due to the updated return, interest under this section is charged at 1% per month or part of the month, on the unpaid tax amount from the due date of the original return until the date of payment under section 234A.
If the updated return reflects additional income and leads to a tax liability that was not covered by advance tax payments, interest under section 234B may be applicable at 1% per month or part of the month on the shortfall amount.
If the taxpayer does not pay the required advance tax in the prescribed installments, interest under Section 234C is charged at 1% per month or part of the month on the amount of shortfall in each installment.
When an updated income tax return cannot be filed?
In India, an updated income tax return cannot be filed under certain circumstances:
- To update an Updated income tax return that is already filed.
- For filing nil or loss return.
- Filing to claim more refund or to result in lower tax liability.
- If the taxpayer has not filed an original return for the relevant assessment year, they cannot file an updated return.
- An updated ITR can only be filed within two years from the end of the relevant assessment year. After this period, the opportunity to file an updated return lapses.
- If the original return has been selected for scrutiny or is under assessment, you may not be able to file an updated return until the assessment is completed.
- If the original return was filed with the intention of tax evasion or fraud, an updated return may not be permissible.
- Survey or search proceedings are initiated against the taxpayer.
- If assessment / reassessment / revision / re-computation is pending or completed.
Filing an updated return can help in maintaining compliance with tax laws and avoiding potential penalties for under reporting income. It’s essential to be aware of any additional tax liabilities and to pay them promptly.
The provision related to updated income tax return was inserted in Budget 2022. It allows taxpayers to update/ file the income tax return (ITR) on payment of additional taxes in case of errors or omissions.
Taxpayers can refer to section 139(8) read with section 140B of the Income Tax Act, 1961.
Frequently Asked Questions (FAQs)
What is ITR-U?
ITR-U is the form specifically designed for filing an updated income tax return in India.
ITR-U allows taxpayers to correct errors, omissions, or under reported income in their originally filed income tax return.
This is especially useful for those who realize mistakes after submitting their original ITR.
The main purpose of introducing ITR-U is to provide an opportunity to taxpayers for voluntary compliance in order to rectify errors and omissions and to reduce litigation. It applies to taxpayers across different income brackets.
Can you file an updated return (ITR-U) under a different tax regime?
No, when filing an updated income tax return (ITR-U) in India, you cannot switch to a different tax regime.
You must file the updated return in form ITR-U under the same tax regime that was selected in your original return. For example, if you filed your original return under the old tax regime, you must also file the updated income tax return in form ITR-U under the old regime.
The choice of tax regime can be made only till the due date of filing income tax return as prescribed under 139(1) of the Income Tax Act,1961. And once chosen, the taxpayer can’t change the tax regime after the due date.
If you wish to switch to a different tax regime, this can typically be done when you file your original return for the next assessment year. It’s a good idea to evaluate the benefits of each regime before filing.
How many times can you file an updated ITR?
As per the provisions of section 139(8A), In India, you can file an updated income tax return (ITR-U) once for a particular assessment year.
This means that if you’ve already filed an updated return in form ITR-U for a specific financial year, you cannot file another updated income tax return for the same year.
While you can make multiple corrections in that one updated income tax return (ITR-U), you are limited to filing it only once for each assessment year.
The updated return (ITR-U) can only be filed if you have already submitted an original return for that financial year.
How much extra tax do I have to pay when I file an ITR-U?
When filing an updated income tax return (ITR-U) in India, if you are reporting additional income, the additional tax liability is structured as follows.
If you file the ITR-U within 12 months from the end of the relevant assessment year, the additional tax on the additional income is 25% of the additional tax due.
If you file the updated return after 12 months but within the two-year limit, the additional tax rate is 50% of the additional tax due.
| Time limit from the end of the assessment year | Additional tax |
| Within 12 months | 25% of the additional tax due |
| After 12 months but within 24 months | 50% of the additional tax due |
How is updated return different from revised return?
A revised income tax return can not be filed without filing the original return.
However, an updated return can be filed within 2 years from the end of the relevant assessment year if you have not filed your original return.
By filing a revised return you can rectify anything in your tax return. However, we have restrictions on updated returns. For instance, you can not reduce your tax liability by filing an updated return.
Last date of filing a revised return is 31st December of the relevant assessment year, while an updated return can be filed within 24 months from the end of the relevant assessment year.
We don’t have any penalty for filing revised returns, however, an updated return carries a penalty of 25% / 50% of the tax liability.
Summary
- You can file an updated return even if you did not file the original return.
- Updated return allows taxpayers to correct any omissions or errors in their income tax returns, discovered after the time limit for filing the revised return has lapsed.
- An updated return can not result in a decrease of the income you reported in your original return.
- Filing updated return within 12 months of the end of the relevant assessment year, you will be liable to pay a penalty equivalent to 25% of the tax plus interest. If it’s filed between 12 and 24 months of the end of the relevant assessment year, the penalty will increase to 50% instead of 25%.
