A deep dive of Updated return (ITR U) – Section 139(8A)

Introduction

The updated return (ITR U) was introduced in the Union Budget 2022 by the H’ble Finance Minister Mrs.Nirmala Seetharaman.

An updated return is a return of income that can be filed by a taxpayer within 24 months from the end of the relevant assessment year, even if he has not previously filed a return for that year. An amount equal to 25% or 50% as additional tax is required to be paid with such updated return. [Section 139(8A), Section 140B, Rule 12AC].

What is an Updated return (ITR U)

An updated return is a type of return which allows the taxpayers to rectify the errors or omissions made or has failed to file the returns within the due date.

As per Section 139(8A) of the Income Tax Act,1961 

[(8A) Any person, whether or not he has furnished a return under sub-section (1) or sub-section (4) or sub-section (5), for an assessment year (herein referred to as the relevant assessment year), may furnish an updated return of his income or the income of any other person in respect of which he is assessable under this Act, for the previous year relevant to such assessment year, in the prescribed form, verified in such manner and setting forth such particulars as may be prescribed, at any time within twenty-four months from the end of the relevant assessment year:

When can an updated return (ITR U) be filed

An updated return (ITR U) can be filed in the following cases:

• Any person who has made an error in the original return, or revised return or belated return.
• Any person who has omitted to disclose any facts in the original return, or revised return or belated return.
• Any person who has failed to file his original return within the prescribed time limit u/s 139.

When an updated return (ITR U) cannot be filed?

An updated return (ITR U) cannot be filed in the following situations:

If an updated return is a loss return.

An updated return cannot be filed if the total income is a loss. However, there is no restriction on filing an updated return if a total income under a head of income is a loss.

If an updated return results in increase of refund.

An updated return cannot be filed if it results in an increase of refund either due to earlier return or in case of non -filing of original return.

If an updated return results in lower tax liability.

An updated return cannot be filed if it lowers tax liability as determined in the earlier return filed.

If search is initiated against the assessee.

An updated return cannot be filed for the previous assessment year in which a search has been initiated under section 132 of the Income Tax Act.

If books of account or other documents or any assets are requisitioned:

An updated return cannot be filed for the previous assessment year in which a requisition is made under section 132A of the Income Tax Act.

If a survey conducted against the assessee

An updated return cannot be filed for the previous year in which a survey is conducted under section 133A of the Income Tax Act.

If documents or assets are seized or requisitioned in case of any other person belonging to the assessee

A person shall not be eligible to file an updated return if a notice has been issued to him to the effect that:

• any money, bullion, jewellery, or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belonging to him; or
• any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertaining to, or any other information contained therein, related to him.

In the above cases, the person shall not be eligible to file an updated return for the assessment year relevant to the previous year in which such search is initiated or requisition is made and any assessment year preceding such assessment year.

If an updated return is already filed

An updated return cannot be filed more than once for any previous assessment year.

If the assessment is pending or completed

An updated return cannot be filed for the previous year for which assessment or reassessment or re-computation or revision is pending or has not been completed.

If AO has information about the assessee under specified Acts

A person cannot file an updated return for any assessment year if the Assessing Officer (AO) has information in respect of him for that year under the following Acts, and the same has been communicated to him before the filing of the updated return: 

• Prevention of Money Laundering Act, 2002;
• The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;
• The Prohibition of Benami Property Transactions Act, 1988; or
• The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976

If AO has information about the assesse under DTAA or TIEA

Where any information is received under Double Taxation Avoidance Agreement (DTAA) or Tax Information Exchange Agreement (TIEA) in respect of a person for the relevant assessment year, the assessee shall not be eligible to file an updated return for that year provided the same has been communicated to the assessee before the filing of updated return.

If any prosecution proceeding is initiated

Where any prosecution proceedings have been initiated against the person for the relevant assessment year, the assessee shall not be eligible to file an updated return for such year.

In other notified cases

A person or class of persons as notified by the Central Board of Direct Taxes (CBDT) shall not be eligible to file the updated return.

Curative updated returns(ITR U)

When an person files an updated return for any previous year as a result of the updated return there is a reduction in the following:

• Carried Forward losses
• Carried Forward Unabsorbed depreciation
• MAT / AMT Credit

The assessee has to file updated returns for the subsequent years to ensure the correctness for the subsequent years.

Time Limit for filing ITR U

When updated return was introduced in the Union Budget 2022, the limit to file an updated return was upto 24 months from the end of the relevant assessment year.

The due date to file ITR U for the AY 2022-23 (FY 2021-22) is 31st March 2025.

Computation of Tax for ITR U

Tax liability for the updated return has to be determined as per the provisions of Section 140B of the Income Tax Act along with the interest under section 234A, 234B, 234C and applicable late fee under section 234F after giving credit to the following:

• Advance Tax
• Tax Deducted at Source (TDS) and Tax Collected at Source (TCS)
• Relief under section 89
• Foreign Tax credit under section 90/90A
• MAT or AMT credit.

Additional Tax payable while filing ITR U

The additional tax shall be equal to 25% of the aggregate of tax and interest payable by a person on the filing of the updated return where such return is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year.

Where the updated return is furnished after the expiry of 12 months from the end of the relevant assessment year but before completion of the period of 24 months from the end of the relevant assessment year, the additional tax payable shall be 50% of the aggregate of tax and interest payable.

Here it is to be noted that for computation of “additional income-tax”, tax shall include surcharge and cess. Further, for the computation of additional tax, the amount of interest payable shall be reduced by the amount of interest paid in accordance with the earlier return.  

How to file an updated return (ITR U)

An updated return can be filed by filing the details in PART A and PART B of the excel utility of the applicable form (ITR 1 to ITR 7).

The updated return utility can be downloaded from the income tax portal.

Budget 2025 updates regarding ITR U

In the 2025 Union Budget, the H’ble Finance Minister has increased the time limit for filing the updated return (ITR U) from two assessment years to four assessment years.