E-filing of Updated ITR enabled for ITR 2, 3 for AY 2021-22

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E-filing of Updated ITR enabled for ITR 2, 3 for AY 2021-22

The Union Budget 2022 first mentioned the idea of an updated income tax return (ITR). The new provision allows taxpayers to correct errors or omissions on their ITRs within two years after filing, with payment of additional taxes.  If a person files an income tax return and later realizes that they failed to record any income, they have up to two years from the end of the relevant assessment year to revise their return, as per tax rules.

The much-awaited updated ITR (ITR-U) is now available on the income tax department’s website. According to the Income Tax website, “E-filing of Updated ITR under Section 139(8A) has been enabled for AY 2020-21 and AY 2021-22 using Excel utility for ITR 2 and 3. The present article briefs the E-filing of Updated ITR.

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ITR-U for Filing Updated Return

Within two years of submitting their tax returns, taxpayers can make challenges as long as their taxes have been paid. The idea of an updated income tax return was initially brought up by the government in the Union Budget 2022. Earlier, ITR 1 & 4 was made available from June 27, 2022.

As per the Memorandum to the Budget 2022, “It is proposed to introduce a new provision in section 139 of the Income Tax Act for filing an updated return of income by any person, whether he has filed a return previously for the relevant assessment year, or not”.

The proposal for updated return over a period longer than that is provided in the existing provisions of the Income-tax Act would on the one hand bring the use of huge data with the IT Department to a logical conclusion resulting in additional revenue realization and on the other hand, it will facilitate ease of compliance to the taxpayer in a litigation free environment.”

According to a new provision proposed by Finance Minister Nirmala Sitharaman during Budget 2022, taxpayers would be able to file “updated” returns to correct omissions and mistakes in their initial tax returns within two years after the end of the relevant assessment year.

Income Tax Updated Return (ITR-U)

Updated return is a type of return on income u/s 139(8A) of the Income Tax Act 1961 to be filed using Form ITR-U. It allows taxpayers to:

  • File Return of Income Not Filed Earlier
  • Make Corrections in Disclosure in Income Tax Return
  • Fix or Change the Head of Income
  • Reduce the Carry Forward Loss
  • Reduce Unabsorbed Depreciation
  • Reduce Income Tax Credit and More

When You Can’t Submit an Updated Return?

In the following circumstances, an updated return cannot be furnished if:

  • The updated return is a return of the loss
  • The updated return is reducing the income tax liability from the return filed earlier
  • The updated return result increases the refund
  • The search has been started under section 132
  • Books of accounts or any other document are called for under section 132A.
  • A survey is done under section 133A
  • Any proceeding of assessment, revaluation, recalculation, or revision is pending or completed in that year.
  • The AO has information against such person under the Prevention of Money Laundering Act or Black Money (Undisclosed Foreign Income and Assets) and Tax Act or Benami Property Transactions Act or Smugglers and Foreign Exchange Manipulation Act and the same have been reported to the assessee.
  • Other Notified Person

Eligible person to File ITR-U  

Any taxpayer can file an updated return whether he has submitted his original/revised/delayed return of income or not

Deadline for Filing an Income Tax Updated Return

The updated return can be furnished within 24 months from the end of the specific assessment year. For the assessment year 2022-23, an updated return can be filed by 31 March 2025.

Penalty for Filing ITRU

  • If the ITRU is filed within 12 months, 25% of outstanding tax & interest on the extra income will be charged
  • If filed between 12-24 months 50% of the outstanding tax and interest on the extra income will be charged

Procedure for E-filing of Updated ITR

Access the official website for Income tax e-filing. In the first part of Form ITR-U You have provided the following details:

  • PAN and Aaadhar Number
  • Assessment Year
  • Reason for filing the updated ITR return

In the second part, you have to provide details of the Head of Income under which additional income is being returned as per Updated Return.

In the final part of the Form, you have to provide details on Tax Payments as per the updated return.

Post by Renu Suresh

Renu is experience content writer specialised in compliances and company rules.