Filing taxes can sometimes be tricky, and errors in returns are common. To help taxpayers rectify mistakes, the Income Tax Department introduced Updated Income Tax Returns (ITR-U). This provision allows individuals and businesses to correct omissions or errors in previously filed returns.
The Budget 2025-26 update extends the time limit for submitting an updated return from two to four years, giving taxpayers more flexibility. In this guide, we’ll cover everything you need to know about this process, including eligibility, filing steps, penalties, and benefits.
What is ITR-U?
Section 139(8A) of the Income Tax Act introduces ITR-U, allowing taxpayers to update their tax filings. This applies if they:
- Forgot to declare income in the original return.
- Made calculation errors.
- Missed filing within the deadline.
However, taxpayers cannot use it to reduce tax liability or claim additional refunds.
Who is Eligible to File?
Individuals and businesses can file an updated return if they:
1) ✅ Discovered unreported income after submitting the original return.
2) ✅ Made an error that increased their tax liability.
3) ✅ Missed filing their return and want to correct the situation.
However, if tax authorities have already initiated proceedings, filing an update is not permitted.
Key Features:
1. Extended Timeframe
The Budget 2025-26 has extended the filing window from two years to four years. This means that taxpayers have more time to ensure their returns are accurate.
2. Limitations
- It cannot be used to reduce taxes or claim additional refunds.
- Cases under investigation or scrutiny by tax authorities are not eligible.
When Should you File an Update?
Filing an update is advisable when:
1) 🔹 Additional income needs to be reported.
2) 🔹 Errors in tax calculations need correction.
3) 🔹 The original filing was missed altogether.
However, if an audit or notice is already issued, an updated return won’t be accepted.
How to File an Updated Return (Step-by-Step Guide)
1) Log in to the Income Tax Portal
- Visit www.incometax.gov.in
- Sign in using your PAN and password
2) Select the Correct Form
- Go to the “File Returns” section.
- Choose ITR-U (Updated Return) and the relevant assessment year.
3) Provide the Additional Income Details
- Enter missing or corrected income details.
- Review your updated tax calculation.
4) Pay Additional Tax
- The system will calculate extra tax and penalties (if applicable).
- Pay using Net Banking, UPI, or Debit Card.
5) Submit & Verify
- Complete submission and verify using Aadhaar OTP, Net Banking, or Digital Signature Certificate.
After submission, a confirmation receipt is generated.
Penalties & Additional Tax:
You may have to pay additional tax when filing an updated return, depending on how late you submit it.
| Filing Timeframe | Additional Tax Penalty |
|---|---|
| Within 12 months | 25% of the additional tax due |
| After 12 months but before 24 months | 50% of the additional tax due |
Beyond two years, the new four-year rule applies, but specific penalty details are awaited.
Advantages of Filing an ITR-U:
1) ✅ Avoid Future Penalties – Reduces the risk of legal action.
2) ✅ Ensures Compliance – Keeps tax records accurate and up to date.
3) ✅ Peace of Mind – Prevents stress from potential tax inquiries.
4) ✅ Extended Deadline – The revised four-year limit offers more flexibility.
Mistakes to Avoid:
1) ❌ Forgetting to verify after submission.
2) ❌ Attempting to use ITR-U to claim refunds (not allowed).
3) ❌ Filing after receiving a tax audit notice.
4) ❌ Not paying the additional tax liability before submission.
By avoiding these mistakes, you can ensure a smooth process.
Conclusion:
The Updated Income Tax Return (ITR-U) is a valuable tool for taxpayers who need to correct past filings. With the new four-year deadline, taxpayers have more time to ensure compliance. However, it is crucial to file updates as early as possible to minimize penalties.
If you need to correct a tax return, take action today and stay compliant!
Also Read: Direct Taxes Code 2025 Modernizes Tax Laws in India
FAQs on ITR-U:
1. Can I file an update to get a refund?
No, updated returns are meant only for adding income or increasing tax liability. Refund claims are not allowed.
2. What’s the deadline for an update for FY 2022-23?
With the revised four-year rule, the deadline for FY 2022-23 (AY 2023-24) is March 31, 2028.
3. What happens if I don’t pay the additional tax?
Your submission will be invalid, and penalties may apply. Payment is mandatory before submission.
4. Can I use ITR-U if I missed the original deadline?
Yes, it allows you to file even if you missed the initial deadline, but with additional tax payments.
5. How do I check my update status?
Log in to the Income Tax Portal, go to “My Returns”, and track your updated filing status.
