Summary: The concept of an Updated Income Tax Return (ITR-U), introduced by the Finance Act, 2022, under Section 139(8A) of the Income Tax Act, 1961, allows taxpayers to voluntarily correct errors or disclose omitted income even after the deadline for regular returns has passed. This provision aims to promote tax compliance and reduce litigation by offering a second chance to file a correct return. An updated return can be filed by any taxpayer who did not file a return, omitted income, or applied an incorrect tax rate. The time limit for filing has been extended to 48 months (four years) from the end of the relevant assessment year. The process requires taxpayers to pay an additional tax, ranging from 25% to 70% of the tax and interest due, depending on when the return is filed. However, an updated return cannot be filed to claim a refund, reduce a tax liability, or if a search or survey has been initiated by the tax authorities.
1. Legislative Background and Evolution of Updated Return (Section 139(8A)
The concept of an Updated Return was introduced through the Finance Act, 2022, and became effective from April 1, 2022, by inserting Section 139(8A) into the Income Tax Act, 1961. This provision was a landmark reform aimed at fostering voluntary tax compliance and reducing the burden of litigation and enforcement on the Income Tax Department.
Prior to this amendment, taxpayers had limited opportunities to correct or disclose omitted income:
- Belated Return under Section 139(4) could be filed only up to 3 months before the end of the relevant assessment year.
- Revised Return under Section 139(5) could be filed only up to 3 months before the end of the relevant assessment year.
Once this window closed, taxpayers had no legal recourse to voluntarily disclose income unless prompted by a notice or investigation.
This led to:
- Increased litigation.
- Higher compliance costs.
- Missed opportunities for revenue collection.
Therefore, in a progressive move to enhance voluntary tax compliance and reduce litigation, the Government of India introduced the concept of Updated Income Tax Return (ITR-U) under Section 139(8A) of the Income Tax Act, 1961. This provision empowers taxpayers to rectify omissions, misreporting, or non-filing of income tax returns even after the expiry of the due dates for original, belated, or revised returns.
This article provides a detailed overview of the eligibility, filing process, timelines, restrictions, and benefits associated with filing an updated return.
2. Legal Framework
The provision for filing an updated return is governed by:
- Section 139(8A) – Enables filing of an updated return.
- Section 140B – Prescribes the computation and payment of additional tax liability arising from the updated return.
3. Who Can File an Updated Return?
Any taxpayer—individual, HUF, firm, LLP, company, AOP, BOI—may file an updated return if:
- They did not file the original return within the prescribed time.
- They filed a return but omitted certain income or made errors.
- They wish to correct misclassification of income or wrong tax rate application.
- They intend to reduce carried forward losses, unabsorbed depreciation, or tax credits.
The updated return can be filed regardless of whether an original, belated, or revised return was filed earlier.
Who Cannot File an Updated Return?
An updated return cannot be filed in the following circumstances
- If it results in a reduction of tax liability.
- If it is filed to claim or enhance a refund.
- If the return is a loss return.
- If a search or seizure has been initiated under Sections 132 or 132A.
- If a survey has been conducted under Section 133A.
- If assessment, reassessment, or revision proceedings are pending or completed.
- If prosecution proceedings have been initiated.
- If an updated return has already been filed for the same assessment year.
4. Time Limit for Filing
The updated return can be filed within *48 months (4 years) from the end of the relevant assessment year.
*Substituted for “twenty-four” by Act No. 7 of 2025, w.e.f. 1-4-2025.
Example: For Assessment Year (AY) 2025–26 (Financial Year 2024–25), the updated return can be filed until March 31, 2030.
5. How to File an Updated Return (ITR-U)?
Step-by-Step Process
- Login to the Income Tax Portal- Visit https://www.incometax.gov.in and log in using PAN/Aadhaar credentials.
- Select the Assessment Year- Choose the AY for which the updated return is to be filed.
- Choose the Appropriate ITR Form- Select the relevant ITR form (ITR-1 to ITR-7) based on income sources.
- Select ITR-U Option- Indicate that the return is being filed under Section 139(8A).
- Provide Reason for Filing- Choose from predefined reasons such as:
- Income not reported correctly
- Wrong head of income
- Incorrect tax rate applied
- Reduction of carried forward loss/depreciation
- Compute Tax Liability- Include additional tax as per Section 140B:
- 25% of additional tax and interest payable if filed within 12 months.
- 50% of additional tax and interest payable if filed between 12 and 24 months.
- 60% of additional tax and interest payable if filed between 24 and 36 months (as per Finance Act 2025).
- 70% of additional tax and interest payable if filed between 36 and 48 months (as per Finance Act 2025).
- Submit and Verify- Submit the return and verify using Aadhaar OTP, DSC, or other available methods.
6. Benefits of Filing an Updated Return
- Voluntary Compliance: Encourages taxpayers to disclose previously omitted income.
- Avoids Penalties: Reduces risk of penal consequences and prosecution.
- Legal Safeguard: Filing ITR-U before detection by authorities can protect against future scrutiny.
- Extended Time Window: Offers up to 4 years to correct errors, providing flexibility.
- Improved Transparency: Enhances trust in the tax system and promotes responsible reporting.
7. Comparison Table between different types of returns of income
| Return Type | Section | Time Limit | Purpose |
| Original Return | 139(1) | Before due date | Regular filing |
| Belated Return | 139(4) | Before 3 months from end of AY | Missed original deadline |
| Revised Return | 139(5) | Before 3 months from end of AY | Correct errors |
| Updated Return | 139(8A) | Within 48 months | Disclose omitted income |
8. Conclusion
The introduction of ITR-U under Section 139(8A) marks a significant step toward a more inclusive and taxpayer-friendly regime. It provides a structured opportunity for taxpayers to rectify genuine mistakes and omissions without fear of penal repercussions, provided they comply with the prescribed conditions and timelines.
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Disclaimer: The information given in this document has been made on the basis of the tax laws prevailing. It is based on the analysis and interpretation of applicable laws as on date. The information in this document is for general informational purposes only and is not legal advice or a legal opinion. You should seek the advice of the legal counsel of your choice before acting upon any of the information in this document. Under no circumstances whatsoever, we are not responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document.
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