Missed filing a belated income tax return? ITR-U is your last chance. Here’s all you need to know

Those who missed filing their belated Income Tax Return (ITR) by December 31 still have an option to file an updated return.

You have to wait until 1 April 2023 to file an updated return for FY 2021-22. This is because an updated return can be filed once the relevant assessment year – in this case 2022-23 – comes to an end.

You can also file an updated return for 2019-20 by 31 March. Are you confused? Here we explain it in more detail.

What is an updated return?

Filing an updated income tax return means filing a new return that practically replaces the previous return filed by the assessee. The provision of an updated return was introduced in the Finance Act 2022 in sub-section (8A) of section 139.

This section provides that any person may file an updated return even if he has already filed an original, late or revised return.

It must be noted that the updated return is filed on the ITR-U form, where the taxpayer must state the reason for updating the return.

Form ITR-U provides several options to the taxpayer to update their returns. These reasons are “previously unfiled return”, “income not declared correctly”, “wrongly selected income”, “reduction of loss carry forward”, “reduction of unabsorbed depreciation”, “reduction of tax credit under section 115JB/115JC”, “wrong rate of tax ” and more.

When can one file it?

For those who do not know, an updated tax return can be submitted after the end of the assessment year, up to 24 months after the end of the assessment year. So, those who want to file an updated return for the financial year 2021-2022 can do so after the relevant assessment year (i.e. 2022-2023) ends on March 31, 2023.

ALSO READ: Taxpayers can file updated returns for last two years under latest rules

It is important to note that an updated return can only be filed in certain situations.

An updated return cannot be filed to, among other things, report a loss or claim a refund.

A person cannot also file an updated return if a search under section 132 has been initiated or an inquiry has been made under section 133A or a notice has been issued by the income tax department as mentioned on the website of the income tax authority here.

In addition to the tax liability, taxpayers also have to pay penalties. If the tax subject submits a return in the first 12 months after the end of the accounting year, the additional tax will be 25 percent of the tax owed. And if the tax return is submitted after 12 months from the end of the assessment year, the penalty assessed is 50 percent of the tax liability.

In case of no tax liability

Few people realize that an updated tax return can be filed even if no tax is due. In such a case, the tax office will impose a fine for submitting the return after the due date.

Late filing penalty is payable under Section 234F of the Income Tax Act.

According to this section, the taxpayer must pay ₹5000/ ₹10,000 if the return is filed after the due date of 31st July. But when the total income of a person is less than ₹5 crore, the fees collected will be less than ₹1000.