Section 139(8): ITR-U and it's Filing Methods

Introduction

Have you ever made errors or misreported any digits in the Income Tax Returns? Once filed, correcting such mistakes can be challenging. To address this issue, the Government introduced the Updated Return (ITR-U), allowing taxpayers to rectify omissions, miscalculations, or undisclosed income in their previously filed returns. It enables individuals and businesses to update their tax filings again and comply with tax regulations. This blog will explore eligibility, the process involved, additional taxes, and strategic approaches to minimize tax liabilities regarding legal requirements.

What is ITR-U?

ITR-U or Updated Return allows taxpayers to update their ITRs by rectifying errors, omissions, and missed filings. It also permits payers to file their missed and belated returns within two years from the end of the relevant Assessment Year.

Let me explain with an example:

Considering you are filing the ITR for the AY 2022-23 and missed the revised/belated return filings, now you can file the ITR-u after the end of the assessment year. The Last date to file the ITR-U is 31 March 2025.

Note: As per Budget 2025, the government has extended the deadline to file the updated return from 2 to 4 years.

Purpose of ITR-U

According to Section 139(8A), taxpayers can file an updated return (ITR-U) regardless of whether they have previously submitted an original, revised, or belated return. They can rectify various issues in their previous filings.

• Errors

• Omissions

• Incorrect statements

• Underreporting of income

• Mismatch in tax credits (TDS/TCS claims)

Who is Eligible?

ITR-U can be filed by taxpayer who made an error in previous filings or failed to file their returns. The Eligibility is to satisfy the mistakes made in any of the following,

• Original return of income, or 

• Belated return, or 

• Revised return

The Following cases are eligible for filing the ITR-U,

• Failed to file returns

• Mistaken the head of income

• Incorrect declaration of income

• Payment at the incorrect tax rate

• To reduce the carried forward loss 

• To reduce the unabsorbed depreciation

• To reduce the tax credit u/s 115JB/115JC

  
  

Who is Ineligible?

Under 139(8A), ITR-U allows taxpayers to correct and update their filings. There are some cases where updated returns are unavailable on

• Already filed an updated return for that assessment year  

• An Updated Return is a return of loss

• The updated return lowers your income tax liability compared to the original return.

• It increases your refund amount.

• A search has been initiated against you under Section 132.

• Your books of accounts or documents have been requested under Section 132A.

• A survey has been conducted under Section 133A.

• Assessment, reassessment, re-computation, or revision for that year is pending or completed.

• The Assessing Officer has relevant information against you under laws like the Prevention of Money Laundering Act, Black Money Act, Benami Property Act, or Smugglers and Foreign Exchange Manipulators Act and has informed you.

• Information under Section 90 or 90A (Double Tax Avoidance Agreement) has been received and communicated to you before filing ITR-U.

• You belong to a notified category as specified by the Income Tax Department.

ITR U – Components

The ITR-U is designed for several sections where they can fill and update their ITRs. Here are the 7 major components to be focused

1. Basic Information:

· Includes name, address, PAN, and other personal details.

· Specify the Assessment Year for which the return is being updated.

· Enter the acknowledgment number and the date of the previous filings.

2. Details of Income:

· Detailed reports of all income sources (salary, house property, business or profession, capital gains, etc.)

· Including adjustments on and corrections to previously declared income.

3. Deductions and Taxable Income:

· Provide deductions claimed under Sections 80C, 80D, etc., of the IT Act.

· Revising the calculations of net taxable income as per revised deductions.

4. Computations:

· Computing tax payable based on the revised taxable income.

· Insert any additional tax payable with applicable interest.

5. Tax Payments:

· Provides information on already paid taxes (such as advance tax, self-assessment tax, and TDS)

· Include the payments with the revised return if the additional tax was paid.

6. Details of Tax Credits:

· Details of any adjustments to previously claimed tax credits or amendments to tax credit claims.

7. Other Information:

· Details related to foreign assets, foreign income, and required disclosures under the Black Money Act.

· List of bank accounts of taxpayers.

8. Declaration and Verification:

· Declaring the accuracy of the information by the Taxpayers.

· Verifying the return contents by the signature of the Taxpayer.

ITR-U – Verification of filings

ITR-U verifies the accuracy of the filing details and authenticates as per cases.

1. Non-Audits:

· Aadhaar OTP

· Electronic Verification Code (EVC)

· Digital Signature Certificate (DSC)

2. Tax Audits: 

· Digital Signature Certificate (DSC)

ITR-U: Additional Taxes

Taxpayers must pay the additional tax (25% or 50%) on the tax amount according to the time of filing the ITR-U.

· 12 months from the end of the AY: 25% of additional tax (tax + interest)

· 24 months from the end of the AY: 50% of additional tax (tax + interest)

ITR-U: Time Limits

ITR-U allows taxpayers to file within 24 months of the relevant assessment year. For example, the last date to file the updated return for AY 2022-23 is 31st March 2025. As per the 2025 budget, the deadline for filing updated tax returns has been increased from 2 to 4 years from the end of the assessment year.

Please note the following assessment year and last dates.

• FY 21-22 (AY 2022-23): 31st March 2027

• FY 22-23 (AY 2023-24): 31st March 2028

• FY 23-24 (AY 2024-25): 31st March 2029

Note: The Last date to file the ITR-U for AY 2024-25 is 31 March 2029.

Budget 2025 Updates

In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced an extension for filing updated income tax returns (ITR-U) from 2 years to 4 years from the end of the relevant assessment year. This allows for excess filing time and allows for easy return correction.

The Additional tax to be paid is as follows:

• 12 months from the end of the AY: 25% of additional tax (tax + interest)

• 24 months from the end of the AY: 50% of additional tax (tax + interest)

• 36 months from the end of the AY: 60% of additional tax (tax + interest)

• 48 months from the end of the AY: 70% of additional tax (tax + interest)

Note: Belated or revised ITRs can't be filed after 31st December of the AY. To file such ITRs, you can use ITR-U from January 1st to correct minor errors or omissions in your original return.

How can PNPC Global assist you?

If you need assistance regarding Updated Returns (ITR-U) or related issues, PNPC Global is here to help. Our experienced team ensures a seamless process, allowing you to receive your withdrawals ASAP. We positioned 3 branches in major cities (Chennai, Bangalore, Hyderabad) and 1 International branch in Dubai (UAE) to solve all your problems effectively.

For consulting, visit our website and fill out the contact form. You can reach our team by calling or sending a “Hi” message to the same WhatsApp number.

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Get in touch with our team today! Collaborate with PNPC Global to enhance your business efficiency, growth, and tax regulations efficiently!!