Updated ITR (ITR-U): Voluntary Compliance Comes at a Cost – Know When & How to File

With increased data tracking through AIS, Form 26AS, and information sharing, the Income Tax Department has strengthened compliance norms. One such important provision is the Updated Return (ITR-U) — a facility meant for voluntary disclosure of missed income, but not without a price.

Many taxpayers confuse Revised ITR with Updated ITR (ITR-U). This article explains the meaning, eligibility, restrictions, penalties, and deadlines for filing ITR-U — clearly and practically.

What is an Updated Return (ITR-U)?

ITR-U is a special return introduced under Section 139(8A) of the Income Tax Act.
It allows taxpayers to declare income missed earlier and pay additional tax along with interest and penalty.

👉 Important:
ITR-U can be filed only if it results in additional tax payment.

Updated ITR vs Revised ITR – Key Difference

Revised ITR

• Used to correct errors or omissions

• Can claim missed deductions or refunds

• No additional penalty

• Must be filed before the deadline

Updated ITR (ITR-U)

• Used only to disclose missed income

• Leads to higher tax liability

• Additional tax + interest + penalty applicable

• Can be filed even after missing original & revised return deadlines

When Can You File ITR-U? (Eligible Cases)

You can file an Updated Return if you want to:

✔️ Report income missed earlier
✔️ Correct income declared under the wrong head
✔️ Rectify application of an incorrect tax rate
✔️ File return after missing original and revised ITR deadlines

When You CANNOT File ITR-U? (Ineligible Cases)

❌ Claim deductions or exemptions
❌ Reduce tax liability
❌ Claim or increase a refund
❌ Correct or set off losses
❌ Make disclosures that do not increase tax payable

📌 Golden Rule:

If your correction does not increase tax, ITR-U is not allowed.

Additional Tax Payable While Filing ITR-U

Filing ITR-U attracts additional tax on the extra tax payable, apart from normal tax and interest.

Time of Filing	Additional Tax
Within 1st year	25%
2nd year	50%
3rd year	60%
4th year	70%

 🔹 Interest under Section 234A/B/C also applies

🔹 Interest @ 1% per month continues until payment

Time Limit to File ITR-U

ITR-U can be filed within 4 years from the end of the relevant assessment year.

Last Dates to File Updated Return

Financial Year	Last Date
FY 2021-22	31 March 2027
FY 2022-23	31 March 2028
FY 2023-24	31 March 2029
FY 2024-25	31 March 2030

🔹 Interest under Section 234A/B/C also applies
🔹 Interest @ 1% per month continues until payment

Should You Use ITR-U? Practical Advice

✔️ Use ITR-U if you genuinely missed reporting income
❌ Do not use it merely to correct small mistakes if no tax increase arises
✔️ File it as early as possible to reduce penalty
✔️ Always reconcile AIS & Form 26AS before deciding

ITR-U is a second chance given by the Income Tax Department — but it is not free. It promotes voluntary compliance while discouraging delayed disclosures through heavy additional tax.

👉 Best Strategy:
File correct and complete returns on time.
Use ITR-U only when unavoidable — and early.

For more such clear explanations on taxation, compliance, and financial laws, stay connected with Tax Manthan.

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