Overview on ITR-U: Updated Income Tax Return (Sec 139(8A))

What is an Updated Income Tax Return (ITR-U) ?

A facility allowing taxpayers to rectify mistakes, disclose omitted income, or file returns if they missed the due date. Introduced to reduce litigation and promote voluntary compliance. Updated Income Tax Return (ITR-U) is a mechanism introduced to promote voluntary tax compliance and reduce litigation. It allows taxpayers to rectify mistakes, disclose omitted income, or file a belated return by paying the applicable additional tax, interest, and fees. But Updated Income Tax Return (ITR-U) cannot be filed in certain cases such as:

1. • • If it reduces the taxpayer’s overall tax liability.
     • If it results in a refund or enhances the existing refund.
     • For cases involving search, survey, or pending assessments.

Timelines for Filing ITR-U :

An updated return can be filed within 48 months (4 years) from the end of the relevant Assessment Year (AY). Example: For AY 2025-26 (FY 2024-25), an updated return can be filed up to March 31, 2030.  taxpayers have more flexibility to ensure accuracy in their filings and avoid penal consequences.

When Can Taxpayer can File ITR-U? :

In the following case ITR U can be file

• Missed the original filing deadline.
• Need to correct errors or omissions.
• Forgot to disclose certain income.
• Misreported income in earlier filings.

What are the Additional Tax Liability under ITR-U?

As per Section 139(8A) of the Income Tax Act, 1961 (amended via Finance Act, 2025), ITR-U is a second chance for taxpayers to come clean on undisclosed or misreported income by paying extra tax. It’s a compliance opportunity, not a tool to reduce tax liability or claim extra refunds Taxpayer can filing ITR-U requires payment of additional tax:

• • If filed within 12–24 months:  Additional 25% of tax & interest.
  • If filed within 24–48 months : Additional 50% of tax & interest.

Updated Income Tax Return -ITR-U Filing Enabled via ITR-3 & ITR-4 : The Central Board of Direct Taxes (CBDT) has now enabled filing of Updated Income Tax Returns (ITR-U) through ITR-3 and ITR-4 forms on the e-filing portal for Assessment Year  2021-22 and Assessment Year 2022-23. Taxpayers can also file ITR-U using the offline Excel utilities of the respective forms.

Restrictions: When You Cannot File ITR-U :

You cannot file ITR-U if you are:

• Claiming or increasing a refund.
• Reducing tax liability already declared.
• Reporting/carrying forward losses.
• Under assessment, reassessment, or revision proceedings.
• Subject to a survey (Sec 133A) or search (Sec 132).
• Where accounts/assets/documents are seized (Sec 132A).
• If an ITR-U has already been filed once for the same AY.

Extended Time Limit under Finance Act, 2025 :

As per Section 139(8A) of the Income Tax Act, 1961 (amended via Finance Act, 2025), taxpayers now have up to 48 months from the end of the relevant assessment year to file an Updated Return. This extension (earlier 24 months) gives taxpayers additional time to:

1. • • File a return if not filed earlier.
     • Correct errors or omissions in previously filed returns.
     • Regularize income by paying additional taxes, thereby avoiding future disputes.