What Is ITR-U? A Complete Guide to Updated Income Tax Return in India

Why the Concept of Updated Return Was Needed

Over the years, lakhs of taxpayers in India have faced a common problem, missing the deadline for filing their income tax return or discovering mistakes in the filed ITR after the timelines were over.

Before Financial Year 2021–22, the Income Tax Act allowed a person to file:

• Original Return
• Belated Return
• Revised Return

But once the deadline passed, there was no way to correct mistakes or voluntarily disclose additional income.

This resulted in:

• Notices from the Income Tax Department
• Penalties
• Prosecution in some cases
• Difficulties in applying for loans, visas, tenders, etc.

To solve this, the government introduced a new provision under Section 139(8A) called the:

Updated Income Tax Return (ITR-U)

This is one of the most taxpayer-friendly reforms that encourages voluntary compliance, reduces litigation, and helps people correct their tax records even after the previous deadlines have expired.

2. What Exactly Is an Updated Income Tax Return (ITR-U)?

An Updated Return (ITR-U) is a type of income tax return that allows a taxpayer to:

• Correct errors
• Declare additional income
• Pay taxes that were previously missed
• Avoid penalties, scrutiny, and legal trouble

It can be filed within 24 months (2 years) from the end of the relevant assessment year, even if you:

• Missed filing the return completely
• Filed but made mistakes
• Underreported income
• Selected wrong ITR form
• Forgot to include income from multiple sources

In simple words:

ITR-U gives a second chance, a final opportunity, to clean up your tax record.

3. ITR-U vs Revised Return vs Belated Return

4. Who Can File an Updated ITR?

Any person who:

• Missed filing the original ITR
• Understated income
• Selected wrong ITR
• Forgot to include capital gains
• Forgot interest income, rental income, or foreign income
• Wants to voluntarily disclose new income
• Wants a clean tax record for loans/visas

5. Who Cannot File an Updated ITR?

You cannot file ITR-U if:

• You want to claim a refund
• There is a reduction in tax liability
• There is an increase in loss
• A search or survey was conducted
• A prosecution proceeding is initiated
• Assessment is already completed
• You want to carry forward losses or MAT credit

6. Situations Where Filing ITR-U Becomes Useful

✔ Salaried individuals who forgot to add:

• Interest from FDs
• Income from multiple employers
• Capital gains from stocks/crypto
• Rent income

✔ Businessmen who:

• Underreported turnover
• Forgot to include cash sales
• Uploaded wrong figures in ITR

✔ Freelancers or professionals who:

• Did not include online earnings
• Forgot TDS income
• Understated receipts

✔ NRI & Foreign Income Cases
✔ Students earning freelancing income

7. Additional Tax under ITR-U (25% & 50%) Explained

If filed within 12 months from the end of AY → 25% extra
If filed within 24 months → 50% extra

This additional tax includes:

• Tax
• Interest
• Fee
• All payable amounts

Basically:

The earlier you file ITR-U, the lower the extra tax.

8. Common Mistakes People Make While Filing ITR-U

• Filing ITR-U even when a refund is expected
• Incorrect income disclosures
• Not estimating the total tax liability correctly
• Not matching AIS/TIS statements
• Using the wrong ITR form
• Missing foreign asset disclosures

9. ITR-U for Different Taxpayer Categories

✔ Salaried Individuals often need ITR-U due to:

• Multiple Form 16
• F&O trading
• Interest income missed
• ESOP taxation

✔ Businesses Useful for:

• Unreported turnover
• Wrong depreciation
• TDS mismatches

✔ Professionals & Freelancers: Useful when income from:

• YouTube
• Blogging
• Freelance platforms
• Consulting

is missed.

10. Documents Required for ITR-U

• PAN, Aadhaar
• Form 26AS
• AIS/TIS
• Bank statements
• Salary Slips / Form 16
• Books of Accounts
• Investment proofs
• Capital gain statements
• TDS certificates

11. Timelines for Filing ITR-U

Assessment Year Last Date to File ITR-U

12. Practical Examples of ITR-U Calculations

Example 1: Salaried Person Missed FD Interest

• Tax payable = ₹10,000
• Interest = ₹1,000
• Total = ₹11,000
• ITR-U Additional Tax = 25% = ₹2,750
• Final payable = ₹13,750

Example 2: Business Turnover Underreported

• Original tax payable = ₹80,000
• Interest = ₹12,000
• Total = ₹92,000
• Additional Tax @ 50% = ₹46,000
• Final = ₹1,38,000

13. Penalties & Consequences of Not Filing an ITR-U

• Higher penalties
• AIS/TIS mismatches leading to scrutiny
• Income Tax Notices
• Prosecution in extreme cases
• Issues in bank loans
• Trouble while applying for visas
• Inability to justify wealth or assets

14. Expert Tips From Taxcellent

• File ITR-U before the AIS mismatch notice arrives
• Always verify Form 26AS, AIS, and bank statements
• Don’t wait for the last year, additional tax increases
• Maintain clean accounting records
• Use a professional CA firm like Taxcellent

A mistake today can cost you 10x in the future, especially with the increasing use of AI-based tax scrutiny.

15. Why Choose Taxcellent?

(Your One-Stop Solution for All Accounting & Tax Needs)

Taxcellent provides:

• Accounting & Bookkeeping
• GST Compliances
• Income Tax Return Filing
• ITR-U and Tax Litigation Support
• Net Worth Certificates
• ROC/MCA Compliances
• Business Registrations
• TDS Returns & Payroll Management
• Investment & Tax Advisory
• All Professional Services Under One Roof

Our focus:

• 100% accuracy
• Transparency
• On-time compliances
• Affordable pricing
• Personalized guidance

16. Frequently Asked Questions (FAQs)

Q1: Can I file ITR-U to claim a refund?
No, refund claims are not allowed under ITR-U.

Q2: Can I reduce my income and show a lower tax liability?
No, only upward revision of income is allowed.

Q3: Is filing ITR-U risky?
No, in fact, it reduces risk by ensuring voluntary compliance.

Q4: Can businesses file an updated return?
Yes, businesses, LLPs, companies, and individuals can file.

Q5: Can salary and capital gains be corrected in ITR-U?
Yes.