Income Tax Returns: All You Need to Know About ITR-U
The Government of India introduced ITR-U (Updated Income Tax Return) to encourage voluntary tax compliance. This form allows taxpayers to correct errors, add omitted income, or rectify misreporting in their previously filed returns.
What is ITR-U?
Introduced under Section 139(8A) of the Income Tax Act, ITR-U is a way for you to fix mistakes you may have made in your original, revised, or belated tax returns. It’s a chance to voluntarily pay any tax you missed out on, even if the traditional deadlines have passed.
Who Can and Cannot File ITR-U?
You can file ITR-U if:
- You made a mistake or forgot to include certain income details in your previous tax return.
You cannot file ITR-U if:
- You’ve already filed an updated return for the same year.
- You want to file a nil return or a return showing a loss.
- You’re trying to claim or increase a refund.
- Filing the return would lower your tax liability.
- You’re currently under an investigation, such as a search or seizure by the Income Tax Department.
- Your assessment, reassessment, revision, or re-computation is pending or has been completed.
What’s the Time Limit?
You have 48 months from the end of the relevant assessment year to file an ITR-U. For example, for the Assessment Year (AY) 2025-26, the last date to file is March 31, 2030.
Do You Have to Pay Extra?
Yes, filing an updated return requires you to pay an additional tax on the total tax and interest due. This is not a penalty but a fee for using this opportunity.
The additional tax is calculated based on when you file:
- 25% if filed within 12 months from the end of the assessment year.
- 50% if filed within 24 months from the end of the assessment year.
- 70% if filed within 36 to 48 months from the end of the assessment year.
Remember, the purpose of an updated return is to pay taxes you missed, not to get a refund.