Know about Updated Return under Income Tax Act

The Indian tax department is sending messages and emails stating that they have identified high-value transactions against your PAN number and if you have not considered it while filing the return, they are asking you to correct the errors or omissions. Have you received such emails?

If you have received it, then the corrective action is to ascertain the list of transactions identified by the tax department. This information is made available in the Income-tax portal under the Annual Information Statement (AIS). Assume, in the case of Raman, he has filed IT Return for the Financial Year ending March 2020 but forgot to consider an interest of Rs.90,000 as income and thereby, missed paying taxes on such income.

If the tax department flags a transaction of March 2020 in June 2022, is there a recourse available for the taxpayer to correct the error? The Answer is Yes. He can file Updated Return (UR) within 3 years from the end of the financial year. In the above case, Mr.Raman can file Updated Return by paying applicable taxes on the interest income.

What types of income would have escaped the taxes? Wherever TDS is done, you would have considered it while filing the original return. Certain income like Dividends earned, interest on Savings Bank account, income from Debentures (NCD), capital gain from the sale or trading of securities, would have been missed while reporting. Updated Return is the remedy to resolve this issue.

The important features of Updated Returns are summarized below –

• Updated Return can be filed from the Financial Year ending March 2020 onwards
• UR can be filed by any person including Companies, Partnership firms, LLPs, Individuals (including NRIs), Trusts, etc.
• UR can be filed whether or not the return is filed in the past.
• An additional tax of 25% is payable if the UR is furnished before the period of 12 months and it goes to 50% if the UR is furnished after 12 months but before the period of 24 months from the end of the relevant assessment year.

Who cannot file Updated Return?

A person cannot file UR in the following cases if the UR –

• Is a Return of Loss
• Has the effect of reducing the total tax liability determined in the original return filed
• Results in a refund or increased refund

Also, persons in whose case a search is initiated or survey has been conducted can’t opt for Updated Return

What are the benefits of filing an Updated Return?

• It is a voluntary compliance to eliminate the lengthy adjudication process by the tax department
• To avoid penalties ranging from 50% to 200% for under-reporting or misreporting of income

Can I file Updated Return now?

The income tax department just notified ITR-U Form to file Updated Return but not enabled it for E-Filling. We will update in this place once it get enabled

In case you need more information on Updated Return, please write to us at This email address is being protected from spambots. You need JavaScript enabled to view it. or call 944080 80886 (Prakash) or 98457 21255 (Prasad).

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