ITR-U (Updated Return) Explained

Filing an income tax return on time is important, but mistakes can still happen. To address this, the Income Tax Act introduced ITR-U, also known as the Updated Return. This provision allows taxpayers to correct errors or disclose missed income even after the usual deadlines have passed. The aim is to encourage voluntary compliance while keeping the process simple and transparent.

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What is ITR-U?

ITR-U is filed under Section 139(8A) of the Income Tax Act. It gives taxpayers an opportunity to update a previously filed return or to file a return that was never submitted. This option is available for up to four years from the end of the relevant assessment year. As a result, taxpayers get more time to regularise their tax position without facing harsh consequences.

When Can You File ITR-U?

An updated return can be filed if income was underreported, a wrong head of income was chosen, or tax was paid at an incorrect rate. It is also useful when carried forward losses or tax credits need to be reduced. However, ITR-U cannot be used to claim a refund or reduce tax liability. It is meant only for paying additional tax, not for getting money back.

Additional Tax on ITR-U

Filing ITR-U comes with an extra tax cost. The additional tax depends on how late the return is filed. It ranges from 25% to 70% of the extra tax and interest, calculated based on the delay. This structure encourages taxpayers to correct errors as early as possible.

How is ITR-U Filed?

ITR-U is filed along with the applicable income tax return form. The form includes basic details, reasons for updating the return, and a revised tax calculation. Any tax due must be paid before submission, and the return must be verified online.

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Why ITR-U Matters

ITR-U offers flexibility and promotes honest tax reporting. It helps taxpayers fix genuine mistakes while supporting a cleaner and more reliable tax system.