Correct Your Tax Filings: ITR-U Facility Now Live for AY 2021-22 & 2022-23
The Income Tax Department has launched the Updated Return (ITR-U) filing facility for Assessment Years (AY) 2021-22 and 2022-23, specifically for taxpayers using ITR-1 and ITR-2 forms. This is a crucial opportunity for eligible individuals to rectify any errors or omissions in their past income tax filings under Section 139(8A) of the Income Tax Act.
The department recently announced this on X (formerly Twitter), stating, “Kind Attention Taxpayers! The facility for filing Updated Returns for AY 2021-22 and AY 2022-23 for ITR-1 & ITR-2 is now available.”
Understanding the Updated Return (ITR-U)
Introduced in Budget 2022, the ITR-U form allows taxpayers to voluntarily correct their returns even after the original, revised, or belated filing deadlines have passed.
Key Deadlines:
- For AY 2021-22 (FY 2020-21): The window for filing ITR-U closed on March 31, 2024.
- For AY 2022-23 (FY 2021-22): The window for filing ITR-U remains open until March 31, 2025.
Important Update: The 2025 Union Budget extended the ITR-U filing deadline from 2 years to 4 years (48 months) from the end of the relevant assessment year. This extension is effective from April 1, 2025, and will apply to returns filed for Assessment Year 2025-26 and onwards.
Who Can File ITR-U for ITR-1 and ITR-2?
You are eligible to file an ITR-U using ITR-1 or ITR-2 if:
- You are an individual or a Hindu Undivided Family (HUF).
- You had originally filed ITR-1 or ITR-2 for the relevant year, or you failed to file any return.
- You have underreported income or discovered an omission or error in your previous filing.
- You are not currently subject to tax evasion or search/survey proceedings for that assessment year.
ITR-1 (Sahaj) is for individuals with income up to ₹50 lakh from salary, one house property, and other sources (like interest).
ITR-2 is for individuals and HUFs who do not have income from a business or profession.
When Can You NOT File ITR-U?
You cannot file an updated return if:
- You are attempting to claim a refund or reduce your tax liability.
- You are filing it after tax authorities have initiated search or survey operations.
- There is an ongoing assessment for the concerned year.
- The updated return results in a loss or increases an existing loss.
Additional Tax Payable
Filing an updated return comes with a penalty in the form of additional tax, which is levied over and above your regular tax and interest dues:
- 50% of the additional tax liability if filed within 12 months from the end of the relevant assessment year.
- 100% of the additional tax liability if filed between 12 and 24 months from the end of the relevant assessment year.
(Note: For filings under the new 4-year window, starting AY 2025-26, the additional tax rates are 25% within 12 months, 50% between 12-24 months, 60% between 24-36 months, and 70% between 36-48 months.)
Why This Facility Matters
The ITR-U facility is a significant reform promoting tax compliance and transparency. It offers taxpayers a valuable opportunity to proactively correct past errors without facing prosecution. With its availability for ITR-1 and ITR-2 for AYs 2021-22 and 2022-23, salaried individuals and HUFs have a clear pathway to ensure their past filings are accurate.
Before filing, it is strongly advised to consult a qualified tax professional. This is particularly important due to the additional tax implications and the need for precise calculations and documentation to avoid potential notices from the tax department.
Taxpayers can access the updated return option by logging into the Income Tax e-filing portal and selecting the relevant assessment year. The ITR-1 and ITR-2 forms have been updated to facilitate ITR-U filing.