Updated Income Tax Return (ITR-U): Who is Liable and How to File under Section 139(8A)

Many taxpayers have recently received emails or SMS notifications from the Income Tax Department indicating that they have not filed a valid Income Tax Return (ITR) and suggesting they consider filing an updated return under Section 139(8A) of the Income Tax Act. This has led to confusion, especially among individuals with no taxable income or income below the basic exemption limit, as to whether filing an updated return is mandatory in such cases.

Under Section 139 of the Income Tax Act, filing of ITR is mandatory for individuals whose income exceeds the basic exemption limit — ₹2.5 lakh for those below 60 years, ₹3 lakh for senior citizens (60-80 years), and ₹5 lakh for super senior citizens (above 80 years). Additionally, residents holding foreign assets or income, individuals claiming tax refunds, those carrying forward losses, or engaging in specified high-value transactions (like large cash deposits, high electricity bills, or foreign travel) are also required to file a return, regardless of income level.

The seventh proviso to Section 139(1) and Notification No. 37/2022 further widen the scope of mandatory filing. This includes cases like business turnover above ₹60 lakh, professional receipts over ₹10 lakh, TDS or TCS deductions exceeding ₹25,000 (₹50,000 for senior citizens), or savings account deposits of ₹50 lakh or more. If an individual falls under any of these conditions and has failed to file the original, belated, or revised return, they are eligible to file an Updated Return under Section 139(8A), subject to restrictions.

An Updated Return (ITR-U) allows such taxpayers to voluntarily disclose omitted income and rectify their tax filings. Initially, the law permitted filing an ITR-U within two years from the end of the relevant assessment year. However, as per the Budget 2025, this window has been extended by an additional two years. Consequently, from April 2025 onward, taxpayers can file updated returns for financial years 2020–21, 2021–22, and 2022–23.

In summary, if a person does not meet the conditions that mandate ITR filing, they are not obligated to respond to department messages regarding ITR-U, and no further action is required. However, those who are liable but missed filing earlier returns should consider rectifying this by using the ITR-U mechanism within the extended timelines.