Section 139(8) of Income Tax Act: A Guide to Updated Returns (ITR-U)

Filing an Income Tax Return (ITR) is a legal responsibility for eligible taxpayers. However, mistakes often happen. People may forget to disclose some income, enter wrong details, or even miss filing altogether. Until recently, taxpayers had very limited opportunities to correct these errors. But with the Finance Act 2022, the government introduced a game-changing concept—Updated Return (ITR-U) under Section 139(8) of the Income Tax Act.

This section permits taxpayers to file "Updated Returns" (ITR-U) and provides a chance to voluntarily correct past mistakes. It’s a relief for many because now you don’t have to wait for a tax notice to fix errors—you can take the first step yourself.

What is Section 139(8) of the Income Tax Act?

Section 139(8) specifically deals with Updated Returns. It allows taxpayers to revise or update their ITR within two years from the end of the relevant assessment year. This provision is extremely useful for those who:

• Forgot to declare an income.
• Claimed excess deductions.
• Missed filing the original return.
• Want to correct errors before facing tax scrutiny.

Put simply, Section 139(8) allows you a chance to update your ITR within two years. This builds trust between taxpayers & the government, ensuring voluntary compliance."

Key Features of Section 139(8)

1. ITR-U Facility:
   • Taxpayers can file an Updated Return even if they missed filing earlier.
2. Time Limit:
   • You can file within 24 months (two years) from the end of the relevant assessment year.
3. Additional Tax Liability:
   • If extra tax is payable due to corrections, the assessee shall be liable to pay simple interest at fifteen per cent per annum along with late fees & penalties.
4. Not for Loss Claims:
   • You cannot file an Updated Return to claim new losses or additional refunds.
5. Voluntary Compliance:
   • Encourages taxpayers to come forward before facing legal scrutiny."

Who Can File an Updated Return?

Any taxpayer—individual, HUF, company, or trust—can file ITR-U under Section 139(8), provided:

• They want to disclose additional income.
• They are ready to pay extra tax, interest, and penalties.
• They file within the two-year window.

However, if an assessment or search proceeding is already started against you, you cannot use this option.

Also Read: Section 139(8a) of Income Tax Act: A Second Chance for Honest Taxpayers

Time Frame to File ITR-U

The biggest advantage of Section 139(8) is the extended time frame. Unlike belated or revised returns that must be filed before the end of the assessment year, ITR-U gives you two full years.

For example:

• If AY 2023–24 (FY 2022–23) return is due, you can file or update it until 31 March 2026.

This flexibility makes compliance easier for taxpayers who discover mistakes much later.

Interest and Penalties Under Section 139(8)

While the law provides relief, it also ensures compliance with a cost. If additional income is disclosed through an Updated Return:

• The assessee shall be liable to pay simple interest at fifteen per cent per annum on due tax.
• An additional 25% to 50% penalty on the tax amount may apply depending on when the ITR-U is filed.
• For late disclosure, penalties are heavier, which encourages early compliance.

This balance of relief & accountability ensures fairness in the system."

Benefits of Filing Updated Returns

1. Peace of Mind – Correct mistakes before tax authorities catch them.
2. Avoid Notices – Reduce the chances of getting a notice or scrutiny.
3. Extended Time – Two years means more breathing room.
4. Voluntary Compliance – Shows honesty and builds trust with authorities.
5. Better Record Keeping – Ensures your ITR truly reflects your actual income.

Also Read: A Guide to Filing Revised Returns

Process to File ITR-U

1. Login to the Income Tax e-filing portal.
2. Choose File Updated Return (ITR-U).
3. Select the relevant Assessment Year.
4. Enter additional income details.
5. Pay tax, interest, and penalties as applicable.
6. Submit electronically with a Digital Signature or EVC.

Once filed, an acknowledgement is generated for your records.

Practical Example

Suppose you filed your ITR for AY 2022–23 declaring income of ₹10 lakh. Later, you realize you forgot to report ₹2 lakh of freelance income. Instead of waiting for a notice, you can file ITR-U under Section 139(8), declare the extra ₹2 lakh, and pay the due tax plus simple interest at fifteen per cent per annum.

This small step helps you stay compliant & avoid bigger penalties in the future.

Applicability of Section 139(8)

Section 139(8) is applicable for all taxpayers except:

• Those who want to claim or increase refund.
• Those declaring or increasing losses.
• Taxpayers involved in serious fraud or search cases.

It is designed purely for correction & voluntary disclosure of additional income.

Difference Between Revised Return and Updated Return

This makes Section 139(8) unique because it provides an additional window that did not exist earlier.

Why Section 139(8) Matters

India has a growing tax base, but mistakes in ITR filing are common. Earlier, taxpayers had limited options. With ITR-U, people now have a second chance to comply without waiting for tax notices. It’s a win-win:

• The government gets additional revenue.
• Taxpayers get peace of mind.

Thus, Section 139(8) of the Income Tax Act creates a culture of voluntary compliance.

Also Read: Who Needs to File ITR and Why It Matters

Conclusion

Section 139(8) of the Income Tax Act is a crucial step towards simplifying tax compliance. It permits taxpayers to file "Updated Returns," also known as ITR-U, and allows you a chance to update your ITR within two years. While this provision comes with additional tax, penalties, and simple interest at fifteen per cent per annum, it offers taxpayers an invaluable opportunity to correct errors and disclose missed income voluntarily.

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