Income Tax Department Enables Updated Returns for ITR-3 & ITR-4
The Income Tax Department has announced that taxpayers can now file updated income tax returns (ITR-U) for the assessment years (AY) 2021-22 and 2022-23 using forms ITR-3 and ITR-4. This facility, introduced under Section 139(8A) of the Income Tax Act, provides individuals and businesses with an opportunity to correct errors, omissions, or under-reported income from previous years.
What is an Updated Return (ITR-U)?
ITR-U is a second chance for taxpayers to declare income that was previously under-reported, reported under the wrong head, or not reported at all. It can also be used to adjust unabsorbed depreciation or incorrect tax credits.
However, there’s a catch: you’ll have to pay an additional tax liability of up to 50% of the extra tax and interest due.
Who can’t file an ITR-U?
- If the return would be nil or a loss.
- If it reduces your tax liability or increases your refund.
- If it’s related to a search and seizure case or ongoing prosecution.
Keep in mind, you can only file one updated return per assessment year.
Who Should File ITR-3 and ITR-4?
- ITR-3: This form is for individuals and Hindu Undivided Families (HUFs) who have income from a business or profession. This includes income from share trading (like futures and options), capital gains, foreign assets, or unlisted equity shares. It’s also for taxpayers with an income above ₹50 lakh who don’t qualify for simpler forms.
- ITR-4 (Sugam): This form is for resident individuals, HUFs, and firms (excluding LLPs) with income up to ₹50 lakh who use the presumptive taxation scheme (Sections 44AD, 44ADA, and 44AE). This scheme simplifies tax filing by allowing small taxpayers to declare income at a fixed rate.
Deadline for Filing
Thanks to the Finance Act, 2025, the deadline to file an updated return has been extended to 48 months from the end of the relevant fiscal year. For example, the ITR-U deadline for AY 2025-26 is March 31, 2030.