Rectify Your Past Tax Filings: ITR-U Excel Utilities for AY 2021-22 & 2022-23 Released!

Great news for taxpayers who may have missed something or made a mistake in their previous income tax returns. The Income Tax Department has released the Excel Utilities for filing Updated Returns (ITR-U) in ITR-1 and ITR-2 for Assessment Years (AYs) 2021-22 and 2022-23, according to the Finance Act, 2025. This is a crucial opportunity to fix past issues and ensure compliance.

What is an Updated Return (ITR-U)?

Introduced in Section 139(8A) of the Income Tax Act, an Updated Return allows taxpayers to correct mistakes or omissions in their filed (or even unfiled) income tax returns. It is a second chance to declare additional income and pay the appropriate tax along with any interest and penalties.

The Finance Act, 2025, has greatly extended the period for filing these updated returns. Previously, the timeline was 24 months from the end of the relevant assessment year. Now, it has been extended to 48 months from the end of the relevant assessment year.

Key Deadlines under the Extended Window:

• AY 2021-22: You can now file an updated return for this assessment year until March 31, 2026.
• AY 2022-23: You have until March 31, 2027, to file an updated return for this assessment year.

Who Can File ITR-U using ITR-1 or ITR-2?

The availability of Excel Utilities for ITR-1 and ITR-2 means that many individual and HUF taxpayers can now take advantage of this facility.

• ITR-1 (SAHAJ): This form is for resident individuals (other than not ordinarily resident) with total income up to ₹50 lakh from:
  • Salaries/Pension
  • One house property
  • Other sources (Interest, Family Pension, Dividend, etc.)
  • Agricultural income up to ₹5,000
  • Long-term capital gains under section 112A up to ₹1.25 lakh.
• ITR-2: This form is for individuals and HUFs who do not have income from "Profits and Gains of Business or Profession" but cannot file ITR-1. This usually includes individuals with:
  • Salary income above ₹50 lakh
  • Multiple house properties
  • Capital Gains (from shares, mutual funds, property, etc.)
  • Foreign assets/income
  • Agricultural income exceeding ₹5,000
  • Crypto income

Important Note: The Updated Return facility can only be used to declare additional income and pay higher tax. It cannot be used to lower your tax liability, claim a refund, or decrease a carried forward loss or unabsorbed depreciation.

Understanding the Penalties

While the extended window offers flexibility, it is essential to understand the penalty structure for filing an Updated Return. The later you file, the higher the additional tax you will pay on the extra income declared.

The penalty is a percentage of the additional tax owed on the updated income:

• 13-24 months from the end of the relevant assessment year: 50% of the additional tax.
• 25-36 months from the end of the relevant assessment year: 60% of the additional tax.
• 37-48 months from the end of the relevant assessment year: 70% of the additional tax.

This is in addition to the original tax liability and interest under Sections 234A, 234B, and 234C.

How to File an Updated Return using Excel Utilities

The Income Tax Department has made the Excel Utilities available on its e-filing portal. Here’s a general guide to the process:

1. Download the Relevant Utility: Visit the "Downloads" section on the official Income Tax e-filing portal (incometax.gov.in) and select the correct Assessment Year (2021-22 or 2022-23) and ITR form (ITR-1 or ITR-2). Download the Excel-based utility.
2. Ensure System Compatibility: Make sure you have a genuine, licensed version of Microsoft Excel 2016 or later with macros enabled.
3. Import Pre-filled Data: It is highly recommended to download your pre-filled JSON data from the e-filing portal. This will auto-populate many fields, reducing errors. You can then import this JSON file into the downloaded Excel utility.
4. Update Income Details: Carefully review the pre-filled data and make all necessary corrections and additions to declare the additional income that was left out or reported incorrectly.
5. Calculate Tax Liability: The utility will assist you in calculating the revised tax liability, including the additional tax and interest as per Section 139(8A).
6. Generate JSON File: After filling in all details and validating the information within the Excel utility, generate the JSON file.
7. Upload on E-filing Portal: Log in to your account on the Income Tax e-filing portal and upload the generated JSON file.
8. Verify Your Return: Complete the e-verification process using Aadhaar OTP, Net Banking, pre-validated bank account, or Demat account.

Why is this important?

The Income Tax Department is increasingly using technology and data analysis to identify discrepancies in taxpayer information. Through programs like the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS), they have a complete view of your financial activities.

Filing an Updated Return provides a way for taxpayers to correct errors and avoid potential scrutiny, notices, or harsher penalties in the future. It shows a commitment to tax compliance and supports a transparent tax environment.

Conclusion

The availability of Excel Utilities for filing Updated Returns in ITR-1 and ITR-2 for AYs 2021-22 and 2022-23 is a significant step for taxpayers by the Income Tax Department, backed by the Finance Act, 2025. While it comes with extra tax implications, it offers a valuable chance for taxpayers to correct their past filings. Don’t miss this extended opportunity to ensure your tax affairs are in order!

For detailed instructions and to download the utilities, always refer to the official Income Tax Department website: www.incometax.gov.in.

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