The Income Tax Department has issued an advisory urging taxpayers to file their updated Income Tax Return (ITR-U) for FY (2022-23) to avoid higher penalties and to reduce additional financial burden before March 31, 2025.
The Income Tax Department has urged timely filing, as returns filed before the deadline attract a lower additional tax of 25 per cent. Missing the deadline increases this to 50 per cent of the additional tax, plus interest.
As of February 28 in the current assessment year (2024-25), 4.64 lakh updated ITRs have been filed, with Rs 431.20 crore in taxes paid. In AY 2023-24, over 29.79 lakh ITR-Us were filed, contributing Rs 2,947 crore in additional taxes, according to PTI.
The updated ITR-U refers to the Updated Income Tax Return (ITR-U), introduced under Section 139(8A) of the Income Tax Act. It allows taxpayers to rectify or update their income tax returns within 24 months from the end of the relevant assessment year. Introduced in 2022, this provision permits revisions within two years of the relevant assessment year.
An updated return cannot be filed if it results in a reduced tax liability or an increased refund. Adding further, taxpayers are not allowed to file an updated return if their return is under investigation or scrutiny by the tax department.
Finance Minister Nirmala Sitharaman has proposed extending the ITR-U filing period from 24 to 48 months, allowing taxpayers more time to declare undisclosed income. However, this extension also includes higher penalty taxes for late disclosures.
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