Tag: Updated income tax return

Upcoming 2025 Income Tax Rules: What You Need to Prepare

Income Tax Changes From 1st April 2025: New Income Tax Rules

What Are The Income Tax Changes For FY 2025-26?

Income Tax Slabs for FY 2025-26 (AY 2026-27)

The Budget 2025 proposed new tax slab rates under section 115BAC i.e., the New Tax Regime or the Default Tax Regime. This was to ensure that individuals save more and increase their spending capacity. These revised tax slab rates will be applicable for income earned in FY 2025-26 onwards.

The new slab rates for FY 2025-26 are as follows:

Income Tax SlabsIncome Tax Rates
Upto Rs.4 lakhNIL
Rs. 4 lakh – Rs.8 lakh5%
Rs.8 lakh – Rs.12 lakh10%
Rs.12 lakh – Rs.16 lakh 15%
Rs.16 lakh – Rs.20 lakh20%
Rs.20 lakh – Rs.24 lakh25%
Above Rs.24 lakh30%

 Note: Income Tax slab rates under the Old Tax Regime (Optional Regime) remain the same.

Increased Rebate Under Section 87A

The rebate u/s 87A for taxpayers filing tax returns under the New Tax Regime was increased to Rs. 60,000 from the previous limit of Rs. 25,000. Now the taxpayer can enjoy a tax free income of up to Rs. 12 Lakhs.

This means taxpayers earning income up to Rs. 12 Lakhs will have no tax liability under the new tax regime.

The rebate for taxpayers opting for the Old Tax Regime remains the same i.e., Rs. 12,500.

Enhanced TDS Thresholds

The provisions of TDS have significant changes that will be applicable from April 2025. It was proposed to enhance threshold limits for various TDS sections for both individuals and businesses. The threshold for TDS on interest received by senior citizens was increased to Rs 1 lakh from the previous limit of Rs. 50,000. Similarly, the thresholds for rent and commissions were also increased. The enhanced threshold limits for various TDS sections are given in the below table.

Effective from April 2025, the TDS threshold limits for various sections were increased as follows:

SectionBefore 1st April 2025From 1st April 2025
193 – Interest on securitiesNIL10,000
194A – Interest other than Interest on securities(i) 50,000/- for senior citizens;(ii) 40,000/- in case of others when the  payer is the bank, cooperative society and post office(iii) 5,000/- in other cases(i) 1,00,000/- for senior citizen(ii) 50,000/- in case of others when the payer is a bank, cooperative society and post office(iii) 10,000/- in other cases
194 – Dividend, for an individual shareholder5,00010,000
194K – Income in respect of units of a mutual fund5,00010,000
194B – Winnings from lottery, crossword puzzle Etc.& 194BB – Winnings from horse raceAggregate of amounts exceeding 10,000/- during the financial year10,000/- in respect of a single transaction
194D – Insurance commission15,00020,000
194G – Income by way of commission, prize etc. on lottery tickets15,00020,000
194H – Commission or brokerage15,00020,000
194-I – Rent2,40,000 (in a financial year)50,000 per month
194J – Fee for professional or technical services30,00050,000
194LA – Income by way of enhanced compensation2,50,0005,00,000
194T – Remuneration, Interest and Commission paid to partnersNIL20,000

   Note: Provisions of other TDS sections remain the same.

Changes To Tax Collected At Source (TCS) 

The threshold for withholding TCS for overseas remittance through LRS will be increased to Rs. 10 lakhs from the previous limit of Rs. 7 lakhs. Further, there will be no TCS on remittance of educational loans taken from a financial institution. Previously, a TCS of 0.5% was applicable if the remittance exceeded Rs. 7 lakhs. 

Section 206C(1H) which required sellers to collect TCS on the sale of goods when the sale value exceeded Rs. 50 lakhs has been removed and won’t be applicable from 1st April, 2025 onwards.

The following TCS changes will be effective from April 2025 for TCS:

SectionBefore 1st April 2025From 1st April 2025
206C(1G) – Remittance under LRS and overseas tour program package7 Lakhs10 Lakhs
206C(1G) – Remittance under LRS for education if financed through educational loans7 LakhsNil (No TCS Applicable)
206C(1H) – Purchase of Goods50 LakhsNil (No TCS Applicable)

Note: Provisions of other TCS sections remain the same.

Updated Tax Return: Extension of Time Limit

The deadline for filing an Updated Tax Return was extended from 12 months to 48 months (4 years) from the end of the relevant assessment year. This extension was to encourage the taxpayers to disclose any previously undisclosed incomes and pay relevant taxes on the same. 

The additional tax liability based on the timeline of filing an updated return is as follows:

If ITR-U filed withinAdditional Tax
12 months from the end of the relevant AY25% of additional tax (tax + interest)
24 months from the end of the relevant AY50% of additional tax (tax + interest)
36 months from the end of the relevant AY60% of additional tax (tax + interest)
48 months from the end of the relevant AY70% of additional tax (tax + interest)

Benefits For IFSC

  • The sunset dates for the commencement of operations of IFSC units for tax concessions have been extended to 31 March 2030.
  • The premium paid on a Life Insurance policy availed from an office in IFSC by non-residents, is completely exempt under section 10(10D) without any maximum premium amount. 

Tax Exemption For Start-ups

Under Section 80-IAC, start-ups incorporated before 01.04.2030 will be allowed a 100% deduction of profits and gains for three consecutive years out of ten years from the year of incorporation subject to certain conditions.

Omission Of Section 206AB and 206CCA

From April 2025, both Sections 206AB and 206CCA of the Income Tax Act 1961 will be omitted to reduce the compliance burden on tax deductors/collectors.

Previously, deductors/collectors were required to determine the correct withholding tax by identifying if the recipient has filed tax returns or not. This was a burden as it led to delays in filing TDS and TCS return statements, higher rates, blocking of capital, and compliance burden.

Deduction On Remuneration Paid To Partners

The limit of deduction available to partnership firms and LLPs for remuneration paid to partners is also enhanced. The calculation limits were revised to make way for higher deductions during tax computation.  

The following limits will be applicable to determine the maximum deduction available for partners remuneration paid:

Book ProfitLimit
On the first Rs.6,00,000 of book profit or lossRs.3,00,000 or 90% of the book profit, whichever is higher
On the remaining balance of book-profit60% of the book-profit

Treatment Of ULIPs as Capital Gains

The proceeds from ULPIs whose premium exceeds 10% of the sum assured or Rs. 2.5 Lakhs annually will be treated as capital gains and will be taxed accordingly (20% for STCG and 12.5% for LTCG). The exemption under section 10(10D) for ULIP proceeds will still be applicable where the annual premium is below Rs. 2.5 lakhs or 10% of the sum assured. 

Relaxation Of Deemed Let-Out Property Provision

Previously, the annual value of up to two self-occupied properties was deemed to be NIL, if the owner is unable to occupy the property due to employment, business, or professional commitments at a different location. It is now proposed that the annual value of up to two house properties shall be NIL if the owner occupies the house for his own residence or cannot occupy it for any reason.

The Finance Bill 2025, relaxed the condition to determine deemed let-out property by allowing individuals to claim up to two house properties as self-occupied and declare NIL income on such properties without any conditions. 

Removal Of Equalisation Levy

A 6% equalisation levy was applicable on digital advertisements when the payment made to a non-resident service provider exceeded Rs. 1 lakh. This levy will be removed from April 1, 2025. 

What are some major tax changes for FY 2025-26?

Some of the major tax changes effective from April 1, 2025, are revised tax slabs, rebate of up to Rs. 60,000,  revised ITRU deadlines, calculation of partner’s remuneration allowable as a deduction and revised TDS/TCS threshold limits.

What is the Rebate available under section 87A?

From FY 2025-26 onwards, taxpayers filing returns under the new tax regime can claim a rebate of up to Rs. 60,000. 

Taxpayers filing returns under the Old Tax Regime can claim a rebate of up to Rs. 12,500.

ITR Filing Deadline: Why Some Individuals Are Receiving Emails from the Income Tax Department

As the deadline for filing Income Tax Returns (ITRs) for the fiscal year 2020-21 approaches, many individuals have recently received emails from the Income Tax Department regarding significant transactions pointed out in their Annual Information Statement (AIS). Here’s a breakdown of what you need to understand about these communications and how to handle them:

Recipients of these communications

Individuals are being contacted by the Income Tax Department due to irregularities or notable transactions identified in their financial records.

The Income Tax Department reaches out to taxpayers through the AIS/Compliance Portal to gather feedback on information obtained from various sources. Taxpayers may be required to respond or clarify inquiries raised in the e-Campaign section to complete the process.

Highlighted transactions

The e-Campaigns initiated by the Income Tax Department may address various concerns, including non-filing of returns or significant/high-value transactions carried out by the taxpayer during the fiscal year.

Understanding the communication

Explains that the messages displayed in the AIS/Compliance Portal’s e-Campaign section indicate that the tax department has uncovered information inconsistent with the income reported in the taxpayer’s ITR.

Deadline for updated returns

Eligible taxpayers are able to file an updated Income Tax Return to rectify errors or omissions in their previously submitted returns. This may lead to additional tax liability upon recalculating income. The deadline to file an updated return for the fiscal year 2020-21 (Assessment Year 2021-22) is March 31, 2024.

Responding to the communication

Since the deadline to file ITR-U is near, the tax department is sending emails pertaining to FY 2020-21 to some taxpayers stating that their case has been selected for e-Verification under e-Verification scheme 2021 visible under the tab ‘e-Campaign’ after clicking ‘Notices’ tab of the Compliance Portal.

He further explained that emails are sent to taxpayers who have either not filed their ITR or whose disclosed information in the filed ITR does not match with the information available with the Department.

Accessing the communication

On the ITR e-filing portal, navigate to the pending action tab and select “Compliance Portal”. Then, proceed to the e-Campaign tab to access a list of transactions flagged by the tax department.

By clicking on each flagged transaction, taxpayers can view additional details about the specific transaction. Transactions marked with an “e” are those that may not need to be disclosed in the ITR according to the income tax system, typically received after recent years’ ITR processing.

Tax experts recommend that these communications are sent to improve compliance and validate financial transactions. a specialized tax filing assistance platform, explains that the purpose of these communications is to verify financial transactions based on information obtained by the tax department.

The department examines data from various sources, including TCS returns, TDS returns, specified financial transactions (SFT) returns, and other relevant channels. Additionally, the department systematically collects and assesses data concerning goods and services tax (GST), import/export activities, as well as transactions involving securities, derivatives, commodities, and mutual funds.

This is achieved by leveraging information provided by diverse third-party entities.

Income-Tax Last Date Reminder or Face Up to 200% Penalty

March 31, 2024, marks the deadline for eligible taxpayers to file their updated income tax return (ITR-U) for AY 2021-22 (FY 2020-21). It is crucial to adhere to this deadline, as failing to do so may result in penalties of up to 200% of the income tax evaded. The ITR-U serves as a means to rectify any previously made errors, such as under-reporting or misreporting of income. Additionally, individuals who were required to file ITR as per tax rules but missed the due date can also use the ITR-U for compliance.

It is important to note that failure to rectify these errors before being detected by the tax department can result in significant financial penalties. Since the assessment year 2017-18, the introduction of section 270A stipulates a penalty of either 50% or 200% of the tax payable for concealing income. Prior to this, as per Section 271 of the Income Tax Act, 1961, the maximum penalty stood at up to 300% of the tax payable until assessment year 2016-17. Therefore, it is imperative for eligible taxpayers to fulfill their filing obligations by the designated deadline to avoid these repercussions.

What is ITR-U?

ITR-U or Updated ITR is to be filed in Form ITR-U which has been prescribed under Rule 12AC of the Income Tax Act. In enables a taxpayer to file/update the tax returns within 2 years from the relevant assessment year. For example, Updated ITR for AY 2023-24 can be submitted till March 31, 2026.

Who is eligible to file ITR-U?

To be considered eligible to file ITR-U, the taxpayer is required to fill in the reasons for updating the return. The taxpayer can furnish an updated, revised, or belated return with omission, error, or wrong statement in the earlier return of income, putting in the following reasons.

Who is not eligible to file ITR-U?

Under the given situations, filing of ITR-U is not applicable.

  • In case the updated return is a return of the loss.
  • Increase in refund/claiming of refund, resulting from the updated return.
  • If the total tax liability is reduced from the return filed earlier.
  • Additional Losses are to be adjusted against the income.
  • Search/survey/prosecution proceedings are initiated for that A.Y. under section 132.
  • In case the books of accounts have been called for under section 132.
  • Assessment/reassessment/ revision is pending or completed for the A.Y.
  • The AO has information against such person under the Prevention of Money Laundering Act or Black Money, Tax Act or Benami Property Transactions Act, or Smugglers and Foreign Exchange Manipulation Act, and the same has been reported to the assessee.
  • In the case of other persons to be notified by the Board.

What is the format of ITR-U?

ITR-U Form is comprised of two parts, part A and part B.

Part A: General Information-139(8A)

(A1) PAN: The PAN details of the assessee are required to be furnished.

(A2) Name: The name of the assessee is required to be filled in.

(A3) Aadhaar Number: The Aadhaar No. of the assessee is required to be furnished.

(A4) Assessment Year: The assessment year for which the assessee is eligible to file an ITR-U is required to be filled.

(A5) Whether return previously filed for this assessment year?: Select the option as Yes or No for the previously filed return.

(A6) If yes, Whether Filed u/s 139 (1) or Others: Select the section under which the previous return has been filed.

(A7) If applicable, enter form filed, Acknowledgement no. or Receipt No. and Date of filing the original return (DD/MM/YYYY): Enter the acknowledgment no. and date on which the return has been filed.

(A8) Are you eligible for filing an updated return as per the conditions laid out in the first, second, and third provisos to section 139(8A)? (Yes/No): Select the option as Yes or No to verify whether you are eligible to file an ITR as per section 139(8A)

(A9) Please choose the ITR form for updating your income (ITRs 1-7 to be selected from the drop-down and filled as per the details made available by the e-filing utility – see instruction): Select the relevant ITR Form from the dropdown.

(A10) Select the Reasons for filing the ITR- U: The relevant reason for filing the ITR- U return is to be selected.

(A11) Are you filing the updated return during the period of up to 12 months from the end of the relevant assessment year or between 12 -24 months from the end of the relevant assessment year?: Select the period of filing of ITR-U.

(A12) (a) Are you filing the updated return to reduce carried forward loss or unabsorbed depreciation or tax credit? Yes/No

(A12) (b) If yes, please specify the assessment years were carried forward loss or unabsorbed depreciation or tax credit is being affected because of this updated return: Select whether the effect was in the revised return or in the updated return.

Part B: ATI Computation of Total Updated Income and Tax Payable

1 (A) Head of income under which additional income is being returned as per Updated Return: Enter the amount in the relevant head of income if additional incomes are there that need to be shown in the updated ITR or ITR-U.

1 (B) Total income as per last valid return (only in cases where the Income Tax Return has previously been filed): Enter the total income as per the schedule TI.

2. Total income as per Part B-TI: Enter the Amount payable, if any that needs to be shown in Part B-TTI.

3. The amount payable, if any (To be taken from the ―Amount payable of Part B-TT of the updated ITR): Enter the Amount payable, if any that needs to be shown in the Part B-TTI.

4. Amount refundable, if any (To be taken from ―Refund‖ of Part B-TTI of the updated ITR: Mention the details of any amount refundable as under part B-TTI of ITR-U.

5. The amount payable on the basis of last valid return (only in applicable cases): Enter the amount payable on the basis of the last valid return.

6. (i) Refund claimed as per last valid return if any (Please see instruction)

6. (ii) Total Refund issued as per last valid return, if any (including interest u/s 244A received: Enter the Refund amount claimed in the last return.

7. Fee for default in furnishing return of income u/s 234F: Enter the Amount of Late Fee u/s 234F if any.

8. Regular assessment tax, if any: Enter the regular assessment tax amount if payable.

9. Aggregate liability on additional income: Enter the aggregate liability amount on the additional income.

10. Additional income-tax liability on updated income [25% or 50% of (9-7)]: At this point, additional amount of tax will be calculated @ 25% or 50%
25% in case of the updated ITR is filed within 12 months and 50% in case the updated ITR is filed after 12 months but before 24 months.

11. Net amount payable (9+10): Enter the net amount payable including the aggregate amount and the additional tax amount paid.

12. Tax paid u/s 140B: Enter the tax amount paid for the additional income.

13. Tax due (11-12): Enter the tax due amount.

14. Tax Payments (Only as per Updated Return): Enter the Tax amount paid in the challan for the self-assessment tax.

Now make the ITR-U filing process hassle-free and automated with Webtel’s ITR Filing Utility.

What is the time limit to file ITR-U?

The time limit for filing ITR-U is 24 months from the end of the relevant assessment year, as per the income tax provisions related to ITR-U, applicable from 1st April 2022. This implies that in the current financial year 2023-24, you can file ITR-U for AY 2021-22 and AY 2022-23.

Is there an additional tax payment requirement for ITR-U filing?

Please note that an Updated ITR cannot be filed if there is no additional tax liability. That is why this return must contain the details of additional tax deposited.

Further, the taxpayer is required to pay an additional 25% interest on the tax due for filing the updated ITR within the preceding 12 months. This interest can rise to 50% in case the updated ITR is filed after the 12-month period but before the completion of 24 months from the end of the relevant Assessment Year.

A taxpayer updating the returns for FY 2020-21 (AY 2021-22) will need to pay the tax due and interest along with an additional 50% of tax and interest.

How to verify the updated return?

The updated ITR can be verified only by using a Digital Signature Certificate (DSC). Alternatively, an Electronic Verification Code (EVC) can be used in non-tax audit cases.

Income Tax Department Notices Unusually High Deductions: Last Date for Filing

March 31 is last date for filing updated Income Tax returns for ’21-22

The last date to file updated Income Tax returns for the financial year 2021-22 is March 31. While examining high refund cases, the Income Tax Department, Tamil Nadu and Puducherry, has noticed that some taxpayers have claimed unusually large deductions u/s 80G (donations to Funds, Charitable institutions, etc.), 80E (interest on education loan) & 80GGC (contributions given to political parties) in their returns of income for A.Ys. 2021-22, 2022-23 & 2023-24. In some cases, taxpayers have claimed total deduction in excess of 80% of their Gross Total Income, which appears improbable. When enquired, many taxpayers were unable to provide evidence to prove the genuineness of the deductions claimed by them.

In a release, P.M. Senthilkumar, Joint Commissioner of Income Tax, said that in this context, it was informed that from April 1, 2022, even after expiry of due dates for filing regular and belated returns, the taxpayers were allowed to file updated returns upon payment of additional tax as provided in section 139(8A) of the Income-tax Act. Under this, the taxpayer can correct errors of omission or commission within two years from the end of the relevant assessment year. 

Filing an Updated Income Tax Return (ITR-U) under section 139(8A)

ITR-U refers to the Updated Return form used for filing an amended or revised income tax return in India. It is a provision provided by the Income Tax Department to enable taxpayers to correct any errors, rectify omissions, or make changes to their original tax return filing. The “U” in ITR-U stands for “Updated.”

ITR-U is primarily used when individuals or entities realize that they have made mistakes in reporting their income, claiming deductions, providing incorrect details, or omitting important information in their initial tax return. By filing an updated return using ITR-U, taxpayers can rectify these errors and ensure that their tax records reflect their financial situation accurately.

The filing of ITR-U falls under Section 139(8A) of the Income Tax Act, which allows taxpayers to revise their returns within a specific timeframe. It is important to note that ITR-U is different from the regular income tax return forms (such as ITR-1, ITR-2, etc.) used for filing the original tax return.

Filing ITR-U involves providing accurate details of the original return, specifying the changes or amendments being made, and submitting the revised return electronically through the Income Tax Department’s official website or other authorized platforms. It is crucial to ensure that the updated return is filed within the prescribed deadline to avoid penalties and legal consequences.

Who can file ITR-U?

  • Return previously not filed

In the case of a Return Previously Not Filed, taxpayers can file an Updated Return to report their income and fulfill their tax obligations.

  • Income not reported correctly

In situations where income was not reported correctly, taxpayers can file an Updated Return to rectify the error and provide accurate income details.

  • Wrong heads of income chosen

When wrong heads of income are chosen, taxpayers can use ITR-U to correct the classification and allocate income under the appropriate heads.

In situations involving the reduction of carried forward loss, taxpayers can file an Updated Return to adjust and reduce the carried forward loss accordingly.

  • Reduction of unabsorbed depreciation

When there is a need for the reduction of unabsorbed depreciation, taxpayers can file an Updated Return to adjust and reduce the unabsorbed depreciation.

  • Reduction of tax credit under Sections 115JB/115JC

In situations involving the reduction of tax credit under Sections 115JB/115JC, taxpayers can file an Updated Return to reduce the tax credit accordingly.

When an incorrect rate of tax has been applied, taxpayers can use ITR-U to correct the rate and ensure accurate calculation of their tax liability.

Read more at: Filing Income-Tax Returns: Understanding Belated, Revised, and Updated ITRs

Who Cannot File Form ITR-U?

  • Return of loss

If the updated return results in a return of loss, it cannot be filed using Form ITR-U. The form is designed for rectifying errors or making changes to the original return, not for reporting a loss.

If filing an updated return reduces the income tax liability that was declared in the earlier filed return, Form ITR-U cannot be used. The purpose of the form is not to revise the tax liability to a lower amount.

  • Increase in refund

If filing an updated return leads to an increase in the refund amount compared to the return filed earlier, Form ITR-U is not applicable. The form is not intended for increasing the refund amount.

  • Search or requisition

If a search has been initiated under section 132 or books of accounts or any other documents have been requisitioned under section 132A, filing Form ITR-U is not allowed.

  • Survey conducted

If a survey has been conducted under section 133A, Form ITR-U cannot be used for filing an updated return.

  • Pending or completed proceedings

If any assessment, reassessment, re-computation, or revision proceedings are pending or have been completed for the relevant assessment year, Form ITR-U cannot be filed.

Suppose the Assessing Officer has information against the person under the Prevention of Money Laundering Act, Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act. In that case, Benami Property Transactions Act, or Smugglers and Foreign Exchange Manipulators Act, and the same has been communicated to the assessee, Form ITR-U is ineligible.

  • Information under agreements

If information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A, and the same has been communicated to the taxpayer before the date of furnishing the return, Form ITR-U cannot be used.

  • Other notified persons

There may be specific categories of individuals or entities who are notified as ineligible to file Form ITR-U as per notifications issued by the tax authorities.

How to File Form ITR-U: Step-by-Step Guide

Part A – Providing Basic Details (ITR-U)

  • Fill in your PAN, Aadhaar Number, and Assessment Year for which you are filing the updated return.
  • Indicate whether you have previously filed a return for this assessment year under section 139(1) or any other section or not.
  • If you have filed a return before, provide details such as the form filed, acknowledgement or Receipt Number, and the date of filing the original return.
  • Check your eligibility to file an updated return, ensuring you do not fall into circumstances where filing an updated return is not allowed.
  • Select the appropriate ITR form for filing the updated return.
  • State the reason for updating your income, such as returns previously not filed, income not reported correctly, wrong heads of income chosen, and others.
  • Specify if you are filing the updated return within 12 months from the end of the relevant assessment year or between 12 to 24 months from the end of the relevant assessment year.
  • Indicate if you are filing the updated return to reduce carried forward loss, unabsorbed depreciation, or tax credit.

Part B – Calculating Updated Income and Tax Liability (ITR-U)

  • Mention the head of income under which you are reporting the additional income in the updated return.
  • Provide the total income as per the last valid return, only if you have filed a return previously.
  • Calculate the total income as per Part B-TI of the updated return.
  • Determine the amount payable or refundable based on the updated return.
  • Consider any amount payable or refund claimed in the last valid return.
  • Account for any fee for default in furnishing the return of income under section 234F.
  • Include the regular assessment tax, if applicable.
  • Calculate the aggregate liability on additional income.
  • Determine the additional income-tax liability on the updated income based on prescribed rates.
  • Calculate the net amount payable or refundable.
  • Report any tax paid under section 140B.
  • Determine the tax due by subtracting the tax paid from the net amount payable.
  • Provide details of tax payments made under section 140B and payments of Advance Tax/Self-Assessment Tax/Regular Assessment Tax not claimed in the earlier return.
  • Note that certain credits or reliefs may not be allowed again under section 140B(2).

What is the Time Limit for Filing ITR-U?

The filing of an updated return, or ITR-U, must be done within a specific time limit. Taxpayers have a window of 24 months from the end of the relevant assessment year to file the updated return. This means that for the current financial year 2022-23, individuals can file updated returns for Assessment Year 2020-21 and Assessment Year 2021-22.

To provide a more precise understanding, here are the last dates for filing an updated ITR for specific assessment years:

Assessment YearLast Date of Updated ITR Filing
2020-2131st March 2023
2021-2231st March 2024
2022-2331st March 2025

Points to Consider for Filing ITR-U

  • Review and verify information: Double-check all the information provided in the form, including personal details, PAN, Aadhaar number, and assessment year. Any errors or discrepancies could lead to complications or delays in processing the updated return.
  • eligibility criteria: Confirm that you meet the eligibility criteria for filing ITR-U. Ensure that your reason for filing for an updated return falls within the permissible circumstances, such as rectifying errors, updating income, or making changes to the original return. If you do not meet the eligibility criteria, consider using the appropriate form or seeking professional advice.
  • Choose the correct ITR Form: Select the correct ITR form that corresponds to your taxpayer’s category, income sources, and updated information. Using the wrong form may lead to incorrect filings and potential penalties.
  • Provide accurate reason for updating income: Clearly state the reason for updating your income in the appropriate section of the form. Whether it’s rectifying omissions, reporting income correctly, or adjusting tax liability, ensure that the reason is accurately stated to avoid any confusion.
  • Timely filing: File the ITR-U within the prescribed time limit. The time limit is generally 24 months from the end of the relevant assessment year. Failing to file within the specified timeframe may result in penalties or other consequences.
  • Include relevant documents: Gather and attach any supporting documents or proofs that validate the changes made in the updated return. These documents may include revised income statements, corrected deduction details, or any other relevant records.
  • Check for pending proceedings: Ensure that there are no pending assessment, reassessment, re-computation, or revision proceedings for the relevant assessment year. If there are any pending proceedings, consult with a tax professional to determine the appropriate course of action.
  • Tax payment details: Provide accurate information of any tax payments made under section 140B and any other payments related to advance tax, self-assessment tax, or regular assessment tax that have not been claimed in the earlier return.
  • Seek professional guidance: If you are unsure about any aspect of filing ITR-U or if your situation is complex, consider seeking assistance from a qualified tax professional. They can provide guidance specific to your circumstances and help ensure compliance with tax laws.

Read more at: New Income Tax Return-U: 10 Important things you should know about Updated Income Tax Return filing

Updated Income Tax Return (ITR- U)

ITR- U updated Return was introduced in Finance Act 2022, and It is applicable from 1st April 2022.

Who can file Updated Return ITR -U :- This return was introduced in Union Budget 2022, which gives the tax payers a chance to Update their return  or File a new return upto 2 years from the end of relevant Assesment year.

For Eg– An Assesee whose due date to file return of Income is 31st July 2022, fails to file the return within the due date, and also fails to furnish his return of income u/s 139(4)[Belated Return] ie 31st December 2022  and 139(5)[ Revised return]  ie 31st December 2022 , can file updated return within 24 months from the end of relevant Assesment year ie 31st March 2025 u/s 139(8A).

In what cases updated return can be filed :-

  • An Assessee who missed return filing deadline and also belated return deadline.
  • When the assesee under reported his return  of Income
  • Chosen wrong heads of Income
  • To reduce carried forward losses
  • To reduce Unabsorbed Depreciation
  • To reduce Tax credit of MAT/ AMT u/s 115JB/115JC
  • Others

In What cases updated return cannot be filed :-

  • Updated return is already filed
  • Updated return is for filing Return of Loss
  • If Updated return results in increase in refund
  • If filing updated return results in lower tax liability when conpared to liability in the original return filed.
  • If search has been initiated u/s 132
  • A survey has been conducted u/s 133A
  • If assessment/ reassessment/ revision/ re-computation is pending or completed.
  • If assessing officer has information against such person under prevention of money laundering act or black money (undisclosed foreign income and asset) and imposition of tax act or benami property transactions act or smugglers and foreign exchange manipulators act and the same has been communicated to the assessee.
  • If any prosection proceedings u/c XXII has been initiated for relevant assesment year of such person, prior to date of filing return u/s 139(8A)
  • Other notified person.

There are two parts to the form- Part A &B. Follow the below-mentioned instructions for filling up the form:

Part A: General information

A1 PAN

A2 Name

A3 Aadhhar Card Number

A4 Assessment Year

A5 Select yes if you filed the return previously for the assessment year.

A6 If yes, look at the ITR acknowledgement (“Filed u/s”) to figure out if it was filed u/s 139(1) or others

A7 Next, enter the form no., acknowledgement no. or receipt no. and date of filing the original return (DD/MM/YYYY). You will find all these details in the ITR acknowledgement.

A8 Check the eligibility conditions mentioned above and select the appropriate option.

A9 Select the ITR form number.

A10 You must now select at least one reason for updating the ITR-U. (multiple selections are allowed)

A11 If 12 months have elapsed from the end of the year in which you filed the return, select ‘12-24 months option’. Else select ‘up to 12 months option’.

A12 In case the updated return reduces the balance of carried forward loss or unabsorbed depreciation, enter the assessment year in which they were affected because of the updated return. Also, mention if a revised or updated return was filed earlier.

Part B: ATI Computation Of Total Updated Income And Tax Payable

A) Enter the additional income figures in each head of Income. A detailed break-up of each head is not required. B) Enter the income declared as per the last return

Enter the Total Income amount. You can find this from ‘Part B-TI’ of the ITR form (1-7) filled by you.

The amount payable, if any (You can take it from the – ‘Amount payable’ section of Part B-TT of the ITR form)

Amount refundable, if any (You can take it from the – ‘Refund’ section of Part B-TT of the ITR form)

Enter the tax payable amount as per the last return.

i) However, if a refund was claimed in the last return, then enter the claim amount ii) If you have received the refund, enter the amount of refund received, including the interest amount on such refund.

If the last return was filed late, enter the fee paid for late filing.

Enter the regular assessment tax paid in the last return

Aggregate liability on the additional income

Additional tax liability on updated income [25% or 50% of (9-7)]

Net tax amount payable (9+10)

Tax already paid u/s 140B:  If updated ITR results in a tax payable amount, the same must be paid as a Self-Assessment Tax. Make the payment and enter the challan details.

Part A & B

Payment of Additional Tax:-

If ITR U filedAdditional Tax to be paid
Within 12 months from the end of relevant assesment year25% of Additional tax+ Interest
Within 24 months from the end of the relevant assesment year50% of Additional tax + Interest

Computation of Tax payable in an Updated return:

ParticularsAmt
Income as per Updated returnXX
Tax on Total IncomeXX
less: TDS/ TCSXX
Less: Advance Tax paidXX
Basic Tax PayableXX
Add: Interest u/s 234 A,B,CXX
Add: Fees u/s 234 F(for late filing of return)XX
Tax PayableXX
Add: Additional Tax ( 25% or 50 %)XX
Total Tax PayableXX

So, finally it can be concluded that the updated return can be filed  only when there is additional outgo of  tax after adjusting with TDS credit and losses.

Big Alerting Filing updated income tax return (ITR) before the end of March 31

In case you happened to under-report your income in the financial year 2019-20, then you are allowed to file an updated income tax return (ITR) prior to March 31, 2023 to incorporate the changes.

The provision of filing an updated return was introduced in the Finance Act, 2022.

At the time of introduction of this provision, a new sub-section 8(A) was inserted to Section 139 of the Income-Tax (I-T) under which a tax payer is allowed to file an updated return of Income Tax (I-T). The deadline for filing an updated return is two years from the end of the relevant assessment year.

So, the taxpayers who inadvertently reported less income while in filing the original return, belated return or revised return can file an updated return of income tax (ITR-U). An updated return can be filed even if the original return is filed by the tax payer or not.

It is vital to understand that there is a difference between a revised return and an updated return. Let us understand the key difference between the two:

A revised return is filed under section 139(5) where a tax payer can file a return to correct the previously filed return within a stipulated time i.e., before December 31 of the relevant assessment year.

On the other hand, an updated return can be filed after the end of the relevant assessment year. Tax payers are given a maximum of two years to file an updated return.

Why should you file an updated return?

An updated return is a provision extended to tax payers who lately discovered an additional income previously not disclosed by them.

The taxpayer must have accrued an additional income tax (I-T) as a result of updated return. Conversely, if there is a tax refund arising out of the new return, then filing an updated tax return is not allowed.

So, to be able to file an updated return, the following three conditions must be fulfilled:

1. An updated return can be filed to pay additional tax liability.

2. Taxpayer cannot file an updated return to report loss, leading to lower tax liability.

3. One can file an updated only once for one assessment year.

Importantly, tax payers must be aware of the fact that an updated return comes with additional tax penalty.

“When an updated return is filed within 12 months of the end of relevant assessment year, there is an additional tax liability of 25 percent. After more than 12 months but before the expiry of 24 months from the end of the relevant assessment year, an additional tax liability of 50 percent is to be paid,” said Delhi-based chartered accountant Deepak Aggarwal.

Also, one can file an updated return in case a proceeding of assessment, search, or survey is pending against the tax payer.

Although the additional tax penalty is too high when seen in isolation but it is still affordable when compared with 300 percent penalty that can be levied in case tax authorities assess the income at a later stage.