Ever missed a tax deadline or realized you underreported income in a past return? The Income Tax Department offers two remedies: Updated Returns (ITR-U) and Condonation of Delay. While both address late filings, they serve different purposes. Let’s break down their differences in plain language to help you choose the right option.
1. Objective: Why Do They Exist?
ITR-U (Section 139(8A)): Think of this as a “correction slip” for your original tax return. If you forgot to report income, claimed excessive deductions, or made errors in past filings, ITR-U lets you voluntarily fix these mistakes.
Condonation of Delay (Section 119(2)(b)): This is a “forgiveness plea” for missing the tax filing deadline. If you couldn’t file your return on time due to genuine reasons (e.g., medical emergencies, natural disasters), this provision allows you to request an extension.
2. Scope: When Can You Use Them?
ITR-U is ideal if:
– You want to declare extra income or correct underreported earnings.
– No original, revised, or belated return was filed earlier.
– You’re not in the middle of a tax audit, search, or investigation.
But you CAN’T use ITR-U to:
– Claim refunds or increase losses.
– Disclose income linked to tax evasion cases.
Condonation of Delay applies if:
– You missed filing any return (original/belated) for a financial year.
– You have valid reasons for the delay (e.g., hospitalization, family crises).
– You need to claim a refund that expired due to the delay.
Note: ITR-U cannot be used to claim refunds, but condonation can if approved.
3. Time Limits: How Late is Too Late?
ITR-U: File within 24 months (e.g., for FY 2022-23, last date is March 31, 2025). The 2025 Budget may extend this to 48 months.
Condonation of Delay: Request relief within 6 years from the end of the financial year (e.g., FY 2017-18 can be addressed until March 31, 2024).
4. Costs: Taxes, Penalties, and Interest
ITR-U: Requires paying additional tax (25–50% of dues, depending on filing timeline). No separate penalties, but interest may apply.
Condonation of Delay: No extra tax, but interest (under Sections 234A/B/C) and penalties may apply if taxes were unpaid.
5. Approval Process: Who Decides?
ITR-U: File directly online. The Centralized Processing Center (CPC) auto-processes it—no human intervention needed.
Condonation of Delay: Submit a written application to the CBDT or Principal Chief Commissioner. Approval isn’t guaranteed and can take up to 6 months.
6. Which One Should You Choose?
Pick ITR-U if: You need to correct income/deductions and are ready to pay extra tax.
Opt for Condonation if: You missed filing entirely due to unavoidable circumstances and need to claim a refund or avoid penalties.
Real-Life Scenarios
- Freelancer Forgot Side Income: A consultant forgot to report ₹5 lakh freelance earnings in FY 2021-22. She can file ITR-U by March 2024, pay tax + 25% penalty, and avoid legal trouble.
- Delayed Due to Hospitalization: A salaried employee couldn’t file his return for FY 2018-19 due to surgery. He can apply for condonation, cite medical proof, and file belatedly if approved.
Final Thoughts
Both provisions aim to simplify compliance but cater to different needs. ITR-U is a proactive tool for correcting errors, while condonation is a lifeline for genuine delays. Always consult a tax professional if unsure—better safe than penalized!
TaxByte by CA Vivek Singh Baghel simplifies tax jargon for you. Stay informed, stay compliant!