How to File Updated ITR (ITR-U) for Missed Income in Past Years?
Introduction:
If you forgot to report some income in your earlier tax returns or missed filing your ITR altogether, don’t worry — there’s a solution. The Income Tax Department of India has introduced a provision called ITR-U or the Updated Income Tax Return. This form allows taxpayers to voluntarily correct mistakes or omissions in previously filed returns. At My Finance Gyan, we bring you the latest updates and guides on tax-related matters. In this blog, we’ll explain what ITR U is, who can file it, when it should be filed, and how to file ITR U online — in simple and clear terms.
Understanding ITR-U:
ITR-U stands for Updated Income Tax Return. It was introduced under Section 139(8A) of the Income Tax Act, giving taxpayers one final opportunity to declare missed income and stay compliant. This form is available for filing from Assessment Year 2020–21 onwards. Taxpayers can submit ITR-U within 24 months from the end of the relevant assessment year.
Who Can File ITR-U?
The ITR-U form is beneficial for a wide range of taxpayers. If you had missed filing your original, belated, or revised ITR, you are eligible to file an updated return. Even if you filed earlier but forgot to include some income — such as bank interest, capital gains, or freelance earnings — ITR-U lets you disclose that now. This option is open for all taxpayers, including salaried individuals, business owners, professionals, and freelancers. The key point is that you should file ITR-U voluntarily, without waiting for a notice from the Income Tax Department.
When Should You File ITR-U?
You should consider filing ITR-U as soon as you realise you have either not filed your ITR for a particular year or reported lower income by mistake. The ideal time to file ITR-U is before the department issues any tax notice. Filing it early ensures you pay a lower penalty. Also, it helps you keep your tax records clean. Whether you missed reporting a part of your salary income or forgot to include income from mutual fund redemptions or bank interest, you can use ITR-U to set things right.
Who cannot file ITR-U?
While ITR-U is helpful, it’s not available in every case. There are clear restrictions on who can file an updated return. For instance, you cannot use ITR-U to:
- Reduce your total tax liability
- Claim a tax refund
- File for a year where assessment, reassessment, or survey proceedings are ongoing
Moreover, if a search or seizure action has been conducted against you, or if the ITR-U has already been filed once for that assessment year, you are not allowed to file it again.
Step-by-Step Guide: How to File Updated ITR (ITR-U):
Here is a simplified guide on how to file ITR U online using the Income Tax portal:
- Log in to the official Income Tax e-Filing website: incometax.gov.in
- Under the ‘e-File’ menu, select ‘Income Tax Return’ → ‘File Updated Return (ITR-U)’
- Choose the relevant Assessment Year for which the return is being filed
- Select the reason for filing ITR-U, such as missed income, incorrect reporting, etc.
- Enter the details of the additional income that was not disclosed earlier
- Compute the tax on this income, along with interest and the ITR-U penalty
- Pay the total dues before submission
- Complete the return by e-verifying through Aadhaar OTP or net banking
- Submit and download the acknowledgment for your records
Always ensure that your calculations are correct and backed by proper documentation.
Tax and Penalty Implications While Filing ITR-U:
While filing an updated return, the Income Tax Department levies an additional tax as a penalty for late disclosure. If the ITR-U is filed:
- Within 12 months, an additional 25% of the total tax and interest is payable
- Between 12 to 24 months, the additional tax increases to 50%
This extra charge is over and above your actual tax liability and interest. The intention is to encourage early compliance while discouraging delay. Also, it’s important to note that no refunds are allowed through ITR-U. This form is only meant for declaring additional income, not for claiming refunds or reducing your earlier tax liability.
Documents Required for Filing ITR-U:
Before you file ITR-U, make sure you have all the necessary documents handy. These include:
- PAN and Aadhaar numbers
- Bank statements for the relevant financial year
- Previous ITR (if any) for reference
- Form 16, salary slips, interest certificates, and capital gains reports
- For business owners or professionals: books of accounts and TDS details
Having the right documents ensures accurate reporting and avoids delays or errors during the filing process.
Benefits of Filing ITR-U:
Filing an ITR-U has several advantages. It allows you to rectify genuine mistakes made during earlier filings without facing harsh penalties. You can avoid notices, scrutiny, and even prosecution by taking this proactive step. It also helps maintain clean and compliant tax records, which are useful for financial planning, applying for loans, or travel visas. Voluntary correction through ITR-U reflects your honesty and tax discipline.
Common Mistakes to Avoid:
Many taxpayers make errors even while trying to correct their old mistakes. Some common mistakes to avoid while filing ITR-U include:
- Filing without gathering complete documentation
- Underreporting income again, knowingly or unknowingly
- Forgetting to pay the applicable penalty or interest
- Choosing the wrong assessment year
- Waiting for a notice instead of taking voluntary action
Make sure to double-check all income details and pay the necessary taxes before submitting the return.
Conclusion:
The ITR-U form is a valuable option for taxpayers who want to fix past tax filing errors or disclose unreported income. With a clear deadline and structured process, it promotes transparency and responsible tax practices. If you realise there are mistakes in your past returns, don’t delay. File your ITR-U return before the deadline and avoid penalties or legal complications. At My Finance Gyan, we provide the latest updates on tax rules, including changes to the ITR U penalty, ITR U section, ITR U last date, and how to file ITR U online. Stay compliant and informed — it’s always better to correct than to regret.
