What is ITR-U Form and How to File It?

Introduction

The Income Tax Return Updated Form (ITR-U) is a provision that allows taxpayers to rectify errors or omissions in their previously filed ITRs. Introduced in the Union Budget 2022, this form enables taxpayers to file an updated return within two years from the end of the relevant assessment year. This step by the government aims to improve tax compliance and provide an opportunity for individuals to correct mistakes without facing legal consequences.

In Budget 2025, the government extended the deadline for filing ITR-U from two years to four years, giving taxpayers more time to ensure their returns are accurate. However, while filing an updated return, taxpayers must pay an additional tax based on how late they file it.

What is ITR-U?

ITR-U, or the Updated Income Tax Return, is a special form under Section 139(8A) of the Income Tax Act. It allows individuals and businesses to update their tax returns if they:

• Missed filing their ITR before the due date.
• Made errors in income declaration.
• Selected the wrong head of income.
• Paid tax at an incorrect rate.

By filing ITR-U, taxpayers can correct mistakes and avoid penalties or legal action. However, it does not allow them to claim additional refunds or reduce their tax liability.

Who Can File ITR-U?

Taxpayers can file ITR-U in the following cases:

• If they did not file their tax return earlier.
• If they made errors in reporting income.
• If they chose the wrong income category.
• If they paid tax at an incorrect rate.
• If they want to reduce carried-forward losses or unabsorbed depreciation.
• If they need to adjust tax credits under Sections 115JB or 115JC.

A taxpayer can only file one updated return for each assessment year.

Who Cannot File ITR-U?

ITR-U cannot be filed in the following situations:

• If an updated return has already been filed for the same year.
• If the taxpayer wants to claim a refund or increase a previous refund amount.
• If the updated return reduces tax liability.
• If a tax search, survey, or seizure has been conducted under Sections 132, 133A, or 132A.
• If the taxpayer’s accounts, documents, or assets have been seized.
• If an assessment or reassessment is pending or completed.
• If there is no additional tax liability (for example, if TDS credits or previous losses fully offset the tax due).

Time Limit for Filing ITR-U

The deadline for filing an updated return has been extended from two years to four years from the end of the relevant assessment year. Here are the deadlines for different financial years:

Additional Tax on Filing ITR-U

When filing an updated return, taxpayers must pay an additional tax based on the time of filing. The additional tax is calculated as a percentage of the total tax due (including interest):

How to File ITR-U?

To file ITR-U, taxpayers must submit it along with the applicable ITR form (ITR-1 to ITR-7). The ITR-U form consists of two parts: Part A (General Information) and Part B (Income and Tax Computation).

Steps to Fill Part A – General Information

1. Enter Personal Details: PAN, Name, Aadhaar Card Number, and Assessment Year.

2. Select Previous ITR Filing Status: Indicate whether you filed a return previously for the selected assessment year.

3. Provide Previous ITR Details: Enter the original ITR form number, acknowledgment number, and date of filing.

4. Choose the Reason for Updating the ITR: Select the relevant reason for filing ITR-U.

5. Specify Time of Filing: Indicate whether you are filing within 12-24 months or later.

6. Mention Impact on Carried-Forward Losses: If applicable, enter the affected assessment year.

Steps to Fill Part B – Computation of Total Updated Income and Tax Payable

1. Enter Additional Income Figures: Report any income that was missed in the original ITR.

2. Provide Income from Previous ITR: Mention the total income as per the last return.

3. Calculate Total Income: Add the previous and additional incomes.

4. Determine Tax Payable: Compute tax liability based on the updated total income.

5. Adjust for Previous Refunds: If a refund was claimed earlier, enter the refund amount.

6. Include Interest and Late Fees: Add applicable interest (Sections 234A, 234B, 234C) and late-filing fees.

7. Compute Final Tax Payable: Consider additional tax (25%-70%) and net payable tax.

8. Pay Self-Assessment Tax: Make the payment before submitting ITR-U.

How to Verify ITR-U?

Once ITR-U is filed, it must be verified using one of the following methods:

• Aadhaar OTP
• Electronic Verification Code (EVC)
• Digital Signature Certificate (DSC)
• DSC (mandatory for tax audit cases)

How to Compute Tax Liability for ITR-U?

Your total tax liability when filing an updated return is calculated as follows:

Total Tax Payable = Tax Due + Interest + Late Fees + Additional Tax

The final tax payable is determined after deducting TDS, advance tax, or reliefs.

How to File ITR-U Online?

To file ITR-U online, follow these steps:

• Login to the Income Tax e-Filing Portal

1. 1. • Go to www.incometax.gov.in
      • Enter your PAN and password.

• Navigate to e-File > Income Tax Return

1. 1. • Select the assessment year and ITR form.
      • Choose “Updated Return (ITR-U)” under Section 139(8A).

• Enter the Required Details

1. 1. • Fill in both Part A and Part B of the ITR-U form.
      • Compute the additional tax and pay it online.

• Verify and Submit the Return

1. • Use Aadhaar OTP, EVC, or DSC for verification.
   • Submit the return and download the acknowledgment.

Keep a Record of the Acknowledgment

• Save the ITR-U acknowledgment for future reference.

Conclusion

ITR-U is a useful option for taxpayers who need to correct their tax returns or file a return after missing previous deadlines. With the extended four-year filing window, taxpayers now have more time to comply with tax regulations. However, filing an updated return comes with additional tax, making it important to file returns accurately and on time. Understanding the ITR-U process can help taxpayers avoid penalties and ensure smooth compliance with income tax laws.

The Author is an Income tax, GST and Accounting practitioner and can be contacted at 9024915488. Thanks