Taxpayers are mandated to submit an updated Income Tax Return (ITR-U) by the end of March 2024 for the fiscal year 2021 (Assessment Year 2021–22). ITR-U is a way of correcting errors in previously submitted ITRs, such as income under or misreported.
Once the applicable assessment year has ended, the Income Tax Act allows you to revise your ITR under Section 139(8A). A person may be subject to fines of up to 200% of the tax due if they fail to correct the mistakes and the taxing authority finds out.
Founder of Delhi-based CA firm Ravi Rajan & Co., S Ravi, explained to the Economic Times that with effect from A.Y. 2017–18, a new section 270A has been implemented that stipulates a penalty of either 50% or 200% of the tax owed if an individual hides income and does not disclose it.
However, the maximum penalty under Section 271 of the Income Tax Act, 1961 would be up to 300% of the amount payable till A.Y. 2016–17, S Ravi added.
When is the deadline for filing an updated return?
After the relevant assessment year ends, taxpayers have 24 months to file a revised return (subject to certain guidelines). If taxpayers missed the deadline for FY20-21, they have until March 31 to file.
Who needs to file an ITR-U?
Taxpayers who either filed their ITR (on time, late or even a revised return) or did not file their ITR for that assessment year can file their return document together with an updated return.
It should be noted that the ITR-U cannot be used to obtain a refund of tax paid.
Does filing an ITR-U require paying more taxes?
ITR-U cannot be submitted without paying additional tax, depending on the conditions.
The extra tax shall equal 50% of the total tax and interest due by a person upon filing the revised return.
However, if the updated ITR-U is submitted after the deadline for filing a revised or belated return has passed but before the 12-month period that ends with the end of the relevant A.Y. has passed, 25% of the total amount of tax and due interest.
Who is ineligible to file an ITR-U?
- In case an updated return has already been submitted.
- For submitting a loss or nil return.
- To get or increase the amount of the return.
- If filing a revised return reduces your tax obligation.
- A search process under Section 132 has been launched against you.
- A survey is carried out per Section 133A.
- If assets, records, or books are seized or demanded by the Income Tax authorities under section 132A.
- If an assessment, reassessment, revision or re-computation is pending or has been completed.
- You cannot file an updated ITR if there is no new tax outgo (that is if the tax liability adjusts with TDS credit or losses and you don’t have any further tax liability).
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