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Received ITR-U Notice for A.Y. 2022-23? File Your Updated Return Before 31st March 2025 to Avoid Additional Tax Penalties
Updated Income Tax Return (ITR-U): Who is Liable and How to File it Under Section 139(8A)
Many individuals are receiving emails and SMS messages stating that the Income Tax Department has noticed that there is no valid ITR filed and asking them to consider filing an updated return under Section 139(8A) of the Income Tax Act. Many of these individuals have no income or income below the taxable limit. The question arises as to whether it is mandatory to file an updated return in such cases.
In this background, let us first understand who is mandatorily required to file an Income Tax Return under Section 139 and whether they are liable to file an updated return.
Who is Mandatorily Required to File an Income Tax Return under Section 139?
As per the Income Tax Act, 1961, individuals are required to file an Income Tax Return (ITR) under the following circumstances:
- Income Exceeding Basic Exemption Limit:
- Below 60 years: ₹2,50,000
- Senior Citizens (60-80 years): ₹3,00,000
- Super Senior Citizens (Above 80 years): ₹5,00,000
- Holding Foreign Assets or Foreign Income:
- Residents with foreign assets or signing authority in foreign accounts must file an ITR, even if income is below the threshold.
- Claiming Tax Refund:
- If the taxpayer wants to claim a refund for excess TDS deducted.
- Carrying Forward Losses:
- To carry forward losses from capital gains or business income.
- Specified High-Value Transactions (as per the seventh proviso to Section 139(1)):
- Deposits exceeding ₹1 crore in current accounts.
- Foreign travel expenses exceeding ₹2 lakh.
- Electricity consumption exceeding ₹1 lakh.
- Additional Conditions (Notification No. 37/2022):
- Business turnover exceeding ₹60 lakh.
- Professional receipts exceeding ₹10 lakh.
- TDS and TCS of ₹25,000 or more (₹50,000 for senior citizens).
- ₹50 lakh or more deposited in savings accounts.
If you fall under any of the above conditions, you can consider filing an updated return under Section 139(8A), but with certain restrictions. If you do not fall under any of the above conditions for the mandatory filing of a return, you can ignore the email or message received from the Income Tax Department, and no action is required from your end.
What is an Updated Income Tax Return (ITR-U)?
Only if you fall under any of the above conditions you can consider filing an updated return under Section 139(8A), but with certain restrictions.
If an individual who is required to file a return under any of the above conditions fails to file the original, revised, or belated return within the due date, they can file an Updated Income Tax Return (ITR-U) under Section 139(8A) to rectify the situation.
Under the previous rules (valid till March 2025), an updated return could be filed within two years from the end of the relevant assessment year. For example, if taxpayers wanted to file an updated return in February 2025, they could only file for FY 2021-22 and FY 2022-23. The Budget 2025 extends the updated return filing period by two more years. This means that from April 2025 onward, taxpayers can file an updated return for FY 2020-21 in addition to the last two years.
Additional Tax Liability for Updated Return Filing in FY 2025-26
|
Financial Year for which the return is filed |
Additional Tax |
|
FY 2020-21 |
70% of normal tax, including interest |
|
FY 2021-22 |
60% of normal tax, including interest |
|
FY 2022-23 |
50% of normal tax, including interest |
|
FY 2023-24 |
25% of normal tax, including interest |
Who Can File an Updated Return?
- Missed Filing the Original, Revised, or Belated Return:
- Taxpayers who have not filed the original return, revised return, or belated return within the specified due date can file an updated return.
- Under-reported Income:
- Individuals who have omitted certain income, such as interest or rental income.
- Incorrect Income Details in the Original Return:
- Rectify errors related to income reporting.
- Mismatch in TDS/TCS Data:
- Resolve discrepancies between TDS/TCS data and the filed return.
- Additional Income Disclosure:
- Voluntarily disclose any additional income not reported earlier.
- Reconciliation of Capital Gains or Other Incomes:
- Correct errors related to capital gains, business income, or other sources.
Conditions for Filing ITR-U
- It must be filed within 24 months from the end of the relevant assessment year (extended to 48 months from April 2025).
- Payment of applicable tax, interest under Sections 234A, 234B, and 234C, and an additional penalty of up to 70% on tax + interest, depending on the timing of filing.
- Cannot be filed if the Income Tax Department has initiated proceedings or investigations.
Who Cannot File an Updated Return?
- No additional tax liability.
- Cases involving a survey or search by the department.
- Filing to claim additional refunds.
- Return leading to a reduction in tax liability.
Conclusion
Filing ITR-U is a beneficial option for taxpayers who missed filing or made errors in their returns, but it comes with a huge tax implication. The department is capturing high-value transactions, and one cannot escape tax liability. It is important to meet deadlines for filing returns in time to avoid huge additional tax and penalties.
If you require assistance in filing an updated return, we, Balakrishna and Co. Chartered Accountants and Tax Consultants, will analyze your financial transactions and help you file an updated return. You can reach us at This email address is being protected from spambots. You need JavaScript enabled to view it..