Budget 2022 has introduced the option to file an updated ITR (ITR-U) for those individuals who have missed the chance to file a tax return for a financial year.
Before this, an individual could file income tax returns of three types: original (filed on or before the due date), belated (filed on or before December 31) or revised (submitted after the original is filed but on or before December 31).
But taxpayers cannot file an updated ITR or an ITR-U before the assessment year comes to an end — March 31, 2023, in this case.
Ruchika Bhagat, MD of chartered accountancy firm Neeraj Bhagat & Co, says, “An updated income tax return can be filed only after the end of the relevant assessment year. Hence, if you have not filed a belated ITR, then you will be allowed to file an updated ITR from April 1, 2023. The updated ITR can be filed within 24 months from the end of the relevant assessment year. So an individual taxpayer can file an updated income tax return for FY 2021-22 (AY 2022-23) between April 1, 2023, and March 31, 2025.”
There are certain situations where an individual cannot file an updated ITR. For example, an individual can file ITR-U if they have missed the ITR filing process or can revise the ITR if they have not reported an income earlier, among others. However, ITR-U cannot be filed to show a loss return, claim income tax refund and in certain other cases.
Penal interest on filing ITR-U
An individual filing ITR-U is liable to pay certain penal interest. An individual will be liable to pay 25 per cent additional tax on the tax dues if the ITR-U for FY 2021-22 (AY 2022-23) is filed within the first relevant assessment year — i.e., between April 1, 2023, and March 31, 2024. If the ITR-U is filed between April 1, 2024, and March 31, 2025, then 50 per cent additional tax on the tax dues must be paid.
Do note that an individual can also file an updated return if they have not filed any ITR earlier and have no pending income tax dues. However, the person will have to pay a penalty for the late filing of the return under Section 234F, says Bhagat.
Under Section 234F of the Income-tax Act 1961, a penalty of Rs 5,000 is levied on an individual filing an ITR after the expiry of the due date — July 31, 2022, in this cycle. However, small taxpayers with a taxable income of up to Rs 5 lakh have to pay only a penalty of Rs 1,000. This late filing fee must be deposited before you start the process of filing a belated ITR.
Process of filing updated ITR
The process of filing an updated ITR is the same as that of a normal ITR. The updated ITR is filed under Section 139 (8A) of the Income-tax Act, 1961.
Once you have filed the income tax return (belated, revised or updated), make sure that you have verified it within 30 days. If the filed ITR is not verified, the income tax department will not take it up for processing. Also, it will be assumed that you have not filed an ITR.