Nishkala had some interest income from bank deposits during FY 2022-23 for which TDS was deducted at source @ 10%. She missed to file her returns for FY 2022-23. She has been receiving reminders from the income tax department to file an updated income tax return. Can she file her updated ITR now?

Income Tax Department E-Campaign:


Income Tax Department, as part of it’s e-campaign has triggered emails to tax payers in January 2025 for filing of updated returns for AY 2022-23 & AY 2023-24 where no ITRs were filed.

UPDATED ITR u/s 139(8A) (ITR-U):

An updated return is a type of tax return that allows taxpayers to file their returns with more time. It is intended to encourage voluntary tax compliance. An updated return can be filed by any person, except in certain circumstances, regardless of whether they have previously filed an original, belated, or revised return for the relevant assessment year. The filing of an updated return is optional for the taxpayer.

TIME LIMIT FOR FILING ITR-U:

The provision of updated returns is effective from 01-04-2022, and the time limit provided for filing an updated return is 24 months from the end of the relevant assessment year. In the financial year 2024-25, a person can file an updated return for AY 2022-23 and AY 2023-24.

UPDATED RETURN CANNOT BE FILED UNDER FOLLOWING CIRCUMSTANCES:

  • If an updated return is a return of loss
  • If an updated return results in lower tax liability
  • If an updated return results in or increase in the refund
  • If a search is initiated against the assessee
  • If books of account or other documents or any assets are requisitioned
  • If a survey conducted against the assessee
  • If documents or assets are seized or requisitioned in case of any other person belonging to the assessee
  • If the updated return has already been filed
  • If the assessment is pending or completed
  • If AO has information about the assessee under specified Acts
  • If AO has information about the assessee under DTAA or TIEA
  • If any prosecution proceeding is initiated
  • In other notified cases

TAX ON UPDATED RETURN:

The provisions of section 140B provide for payment and computation of tax, interest, fee, and additional income tax on updated returns. The updated return shall be accompanied by the proof of tax payment, i.e., normal tax (if any), additional tax, interest, and fee as required under section 140B otherwise it shall be treated as a defective return.

COMMON FAQs:

1. I have a TDS from Bank interest. But while computing my tax liability, it results in a refund. I did not file my original ITR. Can I file an Updated return?

Ans: As per point 3 in the above list, updated return cannot be filed.

2. I missed to file my original ITR for FY 2023-24 before 31-07-2024. I also missed the deadline for belated returns (31-12-2024). I filed an updated return in the first week of January. But missed to claim an eligible deduction. Can I revise my Updated return?

Ans: Refer to point 8 above. Updated return can be filed only once for any AY. There is no provision to “revise” an updated return.

3. Mr. A filed his return of income for the Assessment Year 2022-23 declaring a total income of Rs. 10 lakhs. Subsequently, he noticed that he had failed to disclose in his return of income a short-term capital gain of Rs. 2 lakhs arising from the transfer of listed equity shares under section 111A. In the same year, he also suffered a long-term capital loss of Rs. 10 lakhs from the transfer of immovable property. Can he file an updated return?

Ans: In this case, Mr. A would be required to carry forward the long-term capital loss from the transfer of immovable property because it cannot be adjusted from the other incomes that Mr. A has. But due to this fact, he won’t be restricted from filing an updated return because ultimately his total income (after including short-term capital gain from the transfer of listed equity shares) would be positive, i.e., Rs. 12 lakh.

BUDGET UPDATES ON UPDATED ITR:

Finance Minister Smt. Nirmala Sitaraman, in her Union Budget 2025-26 proposal seeks to extend the updated return window from 2 years (24 months) to 4 years providing a greater flexibility to tax payers to amend their filings. Updated return can be filed by paying additional tax as under:

ITR-U filed within 12 months from the end of the relevant assessment year – 25% additional tax


ITR-U filed within 24 months from the end of the relevant assessment year – 50% additional tax


ITR-U filed within 36 months from the end of the relevant assessment year – 60% additional tax


ITR-U filed within 48 months from the end of the relevant assessment year – 70% additional tax

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CA Unnamalai L
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