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In the new updated IT returns form, taxpayers should provide the reason for filing and the portion of income to be allowed for taxation purposes.
How to file an updated ITR
ITR-U form can be filed within two years from the end of the appropriate assessment year.
Proper reasons should be provided for revising an income return that has not been filed yet. This includes situations where income was not reported correctly, the wrong heads of income were chosen, or carried forward losses were reduced. Proper justification is required to make such revisions.
The deadline for filing an updated ITR for FY 2021-22 (AY 2022-23) is 31st March 2025.
“Taking this trust further, I now propose to extend the time limit to file updated returns for any assessment year from the current limit of 2 years to 4 years,” Finance Minister Nirmala Sitharaman said in her eighth budget speech.
According to the proposed provisions, taxpayers will have to pay additional tax penalties of 60% and 70% if the return is filed between 24-36 months and 36-48 months, respectively, after the assessment year ends.
Tax incidence is lower if a taxpayer files an updated income tax return (ITR) within a shorter time frame. If filed before 12 months from the end of the assessment year, additional tax payable is 25%, and 50% if it is filed within 12-24 months.
If a taxpayer does not report additional income within the timeframe of four years, they will no longer be able to report to the IT department. A tax penalty of up to 200% of the tax payable amount can be levied.
What is an Income Tax Updated Return (ITR-U)
As per Section 139(8A) of the Income Tax Act 1961, an updated return can be filed using Form ITR-U. It allows taxpayers to:
File return of income not filed earlier.
Make corrections to their income tax return disclosures.
Fix or change the head of income.
Reduce carry-forward loss.
Adjust unabsorbed depreciation.
Reduce income tax credit,
and more.
(Edited by : Sudarsanan Mani)