Updated Income Tax Return: All You Need to Know

An updated return is a tax return that enables taxpayers to submit their returns with more time which aims to promote voluntary tax compliance. Except under certain situations, anyone can file an updated return, regardless of whether they previously filed an original, belated, or revised return for the relevant assessment year. The taxpayer may choose whether or not to file an updated return. In this blog, we will discuss all you need to know about the updated income tax return in detail.

When can an Updated Return be Filed?

Except in particular circumstances, anyone may file an updated return. A person may file an updated return of his or another person's income for which he is liable under the Income-tax Act, such as in a representative capacity or in the case of income clubbing. A person may file an updated return even if he has previously filed a return of loss under section 139(3) for the relevant assessment year, but the updated return cannot be a return of loss.

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Eligibility for Filing an Updated Income Tax Return-

Anyone who has made an error or overlooked certain income facts on any of the forms, including the first return of income, the belated return, or the revised return, is eligible to file an updated return.

When an ITR-u can be Filed-

• Did not file the return.
• If missed the deadline for both the return filing and late return.
• Income is not appropriately disclosed.
• Choosing the incorrect source of income
• If paid tax at the incorrect rate.
• To minimize the carried-forward loss
• To minimize unabsorbed depreciation.
• Updated return can be filed to reduce the tax credit
• A taxpayer may only file one updated return every assessment year (AY).

Time Limit for Filing an Updated Income Tax Return

The provision for updated returns is effective on April 1, 2022, and the deadline for filing an updated return is 24 months following the end of the applicable assessment year. During fiscal year 2023-24, a person can file an amended return for years 2021-22 and 2022-23.   

Restriction and Exceptions For Filing an Updated Income Tax Return

• If an updated return leads to a loss, an amended return cannot be filed if all revenue is declared as a loss. However, if there is a loss in any income category but the total income is positive, an updated return may be filed without restriction.
• If an amended return leads to a lesser tax liability. An amended return cannot be filed if it reduces the total tax liability computed with an earlier return. [As updated by the Finance Act of 2023].
• If a revised return results in an increased refund. An amended return cannot be submitted if it results in a refund or increases the refund amount owed based on a previous return.
• If a search is initiated against the assessee, an updated return cannot be filed for the assessment year prior to that year or the year pertinent to that year.
• If books of account, records, or assets are requested, an amended return cannot be prepared for the assessment year relevant to the previous year in which a requisition is made under section 132A, or for any assessment year prior to that year.
• If a survey is conducted against the assessee, an amended return cannot be filed for the assessment year relevant to the previous year in which the survey was undertaken under section 133A, nor for any assessment year prior to that.
• If any other person connected to the assessee has their documents or assets confiscated or requisitioned. A person cannot file an updated return if he receives a notice that any money, bullion, jewelry, or valuable articles or things that belong to him or to anyone else have been seized or requisitioned under section 132 or section 132A. In such case updated return cannot be filed for the assessment year that pertains to the year prior to the assessment year in which the search or requisition was initiated
• If the amended return had been submitted earlier, an updated return can only be filed once during a particular assessment year, it cannot be altered.
• Whether the evaluation has been finished or not While the assessment, reassessment, recomputation, or revision is ongoing or complete, the assessee is not permitted to file an amended return for the year.
• If AO is aware of the assessee's status under DTAA or TIEA A person cannot file an updated return for a given assessment year if he receives information under the Tax Information Exchange Agreement (TIEA) or the Double Taxation Avoidance Agreement (DTAA) for that year unless the information is shared with him before the updated return is filed.
• A person will not be able to file an amended return for the relevant assessment year if any prosecution proceedings are started against him.
• Other than above cases, the Central Board of Direct Taxes (CBDT) will determine which persons or classes of individuals are not eligible to file the amended return.

Form for Filing an Updated Return 

The relevant ITR Form for the taxpayer must be used to file the amended return. The taxpayer must complete Schedules 'Part A Gen_139(8A)' and 'Part B ATI' of the relevant form in order to submit a revised return.   

Manner of Filing an Updated Income Tax Return

The following taxpayers need to use a Digital Signature Certificate (DSC) to electronically file an updated return: (a) A company; (b) A political party; (c) Any individual whose accounts, aside from those filing returns in ITR-7, are subject to an audit under Section 44AB of the Income-tax Act. Other taxpayers are required to use an Electronic Verification Code (EVC) or a Digital Signature Certificate to submit their updated returns online.  

Additional Tax on Updated Return 

If an updated return is filed after the deadline for filing a belated or revised return but before the end of a 12-month period from the end of the relevant assessment year, the additional tax will be equivalent to 25% of the entire amount of tax and interest that a person must pay upon filing an amended return. The additional tax payable is 50% of the total tax and interest payable if the updated return is filed after 12 months from the end of the relevant assessment year but before the end of the 24-month period from the end of the relevant assessment year.

The term "additional income-tax" needs to be clarified to include cesses and surcharges. Additionally, the amount of interest paid in accordance with the prior return must be subtracted from the amount of interest payable for calculating additional tax.  

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How to File ITR-U?

• Login to the e-filling portal
• Now, enter information like the assessment year, Aadhar card number, and PAN.
• If you have already submitted your return for the assessment year, click "yes."
• If so, find out whether it was filed under 139(1) or another provision by looking at the ITR acknowledgement ("Filed u/s").
• Next, enter the date of the original return, form number, acknowledgement number or receipt number.
• Examine the aforementioned qualifying requirements and select the appropriate alternative.
• Select the form number for the ITR.
• Select reason for updating the ITR-U.
• Select '12-24 months option'
• Choose the 'up to 12 months option' instead.
• Indicate which assessment year was impacted by the update if the updated return lowers the remaining amount of unabsorbed depreciation or carried forward loss. Additionally, indicate if an updated or revised return has already been filed.
• Under each Income heading, enter the additional income values. It is not required to break down each head in detail.
• Enter the income filled on your previous return.
• Enter the total amount of your income.
• The 'Amount payable' section of Part B-TT
• The 'Refund' section of Part B-TT
• Enter tax due
• Provide the claim amount, though, if a income tax refund was requested in the previous return. Enter the amount and interest if any.
• Include the late filing fee if your prior return was submitted after the deadline.
• Enter the assessment tax that was paid at the time of the previous return.
• Total responsibility for higher income
• Updated income carries an additional tax obligation [25% or 50% of (9-7)].
• Enter the amount of net tax due
• Pay the self-assessment tax
• After paying, enter the challan information.

Conclusion

The requirement to file an amended return under Section 139(8A) of the Income-tax Act is an important step toward fostering honest and voluntary tax compliance. It gives taxpayers a second chance to remedy omissions, report extra income, or resolve any real errors in previous filings—without incurring hefty penalties. However, before going, make sure you understand the exact eligibility criteria, restrictions, and time constraints. By assuring openness and quick rectification, the updated return serves not just the individual taxpayer but also the larger goal of a more accurate and trustworthy tax system.