New Delhi: Taxpayers who wish to correct any errors or misreporting in their Income Tax must file their updated Income Tax Return (ITR-U) before March 31, 2025. There will be a higher additional tax if this is not done by the deadline.
An ITR-U could be filed if a previous return was not filed, an income declaration was made incorrectly, the income heads were selected incorrectly, or the carried-forward losses were reduced. Taxpayers have two years from the end of the relevant assessment year to voluntarily correct errors or omissions in their income tax returns using the ITR-U.
This clause is applicable when previous filings contain mistakes, omissions, or incorrect statements. Taxpayers can file ITR-U for FY22 (AY 2022-23), FY23 (AY 2023-24), and FY24 (AY 2024-25) before March 31. Taxpayers who fail to do so within the deadline will have to pay a higher additional tax, which will vary depending on the timeframe in which the return is filed.
According to Section 140B, if an updated return is filed within 12 months, there will be an extra tax liability of 25% of the total tax, interest, surcharge, and cess. If it is filed after 12 months but within 24 months, there will be a 50% tax liability from the end of the relevant assessment year.
The concept of ITR-U under Section 139(8A) of the Income Tax Act, 1961, which as introduced by the Finance Act, 2022, allows taxpayers to voluntarily correct errors or omissions in their income tax returns within two years from the end of the relevant assessment year.
Taxpayers can file an ITR-U when a prior return is not submitted, an income declaration is incorrect, income heads are selected incorrectly, or carried-forward losses are reduced. It can also be filed when a tax credit under Section 115JB/115JC is reduced, an incorrect tax rate is applied, and unabsorbed depreciation is reduced.
Under Section 139(8A), any taxpayer, irrespective of whether they have previously submitted an original, revised, or belated return, can file an updated return.
The deadline for filing updated ITRs has been extended from two years to four years from the end of the relevant assessment year, under the 2025 Budget. Taxpayers now have extra time to correct any mistakes or omissions in their original return.
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