Last Chance: File Your ITR-U Before March 31 or Pay Higher Penalties

If you forgot to disclose some income or made a mistake in your tax return, don’t worry. You can still correct it by filing an updated Income Tax Return (ITR-U). With the March 31 deadline coming up, this is a good time to review your return and make any necessary changes.

What do you understand by ITR-U?

ITR-U is allowed under Section 139(8A) of the Income Tax Act. It lets taxpayers correct errors, report income that was missed earlier, or even file a return if they did not file one before. You can file an ITR-U within four years from the end of the relevant assessment year.

For example, for AY 2021-22, the last date to file ITR-U is March 31, 2026. The earlier you file it, the less extra tax you will have to pay.

Who is eligible to file ITR-U?

Any taxpayer can file ITR-U, whether they have already filed their original, revised, or belated return, or even if they did not file one at all. If you have already filed a return, you will need to mention its acknowledgement number while filing the updated return. However, ITR-U cannot be filed if it shows nil, reports a loss, reduces your tax liability, or increases your refund. It is also not allowed if a search or seizure action has been conducted against you or if prosecution has already started.

Penalties for late filing of ITR-U

Although the government has extended the time limit to four years, filing an ITR-U comes with an extra cost. You must pay the regular tax and interest, along with an additional tax. If you file within 12 months, you need to pay 25% extra on the tax and interest. This increases to 50% if filed within two years, 60% within 36 months, and 70% if filed between 36 and 48 months.

Therefore, it is better to inspect your tax return now and correct any mistakes as soon as possible. Delaying it could lead to unnecessary legal trouble.