In the Union Budget 2022, the government suggested the idea of an updated return for income tax purposes. This article will discuss all about Filing of Form ITR-U.
So, what exactly is a revised ITR or Updated ITR or ITR-U?
In accordance with section 139(8A) of the Income Tax Act, taxpayers who subsequently learn they failed to report income have up to two years from the end of the relevant assessment year to amend their ITR Filing or file a new return if no return was previously filed. The amount of additional income under the statutory income headings for which additional tax is due is all that the assessee needs to report. For the purpose of submitting such revised tax returns, the “ITR-U” form has just been made available.
Who can file an updated ITR?
In case of any omission, inaccuracy, or inaccurate statement in his previous return of income, any taxpayer may submit an updated return, whether he or she has filed/not furnished an original return, amended return, or belated return. The following are the cases where a taxpayer is eligible for filing updated ITR using Form ITR-U:
- Return previously not filed
- Income not reported correctly
- Wrong heads of income chosen
- Reduction of carried forward loss
- Reduction of unabsorbed depreciation
- Reduction of tax credit u/s 115JB/115JC
- Wrong rate of tax
What is the time limit to file ITR-U?
The ITR-U income tax provisions did go effective on April 1, 2022. ITR-U must be submitted within 24 months after the completion of the assessment year. For tax years 2020-21 and 2021-22, you can submit Form ITR-U in the current fiscal year, 2022-23.
How much extra do you have to pay while filing ITR-U?
If the Updated ITR is submitted within 12 months from the end of the relevant Assessment Year, the extra tax burden to be paid is 25 percent; if filed after 12 months, but before 24 months, the additional tax to be paid is 50 percent. Therefore, taxpayers who wish to amend their returns for FY 2019-20 must pay the original tax, interest, and a penalty equal to 50 percent of the original tax, interest, and penalty. But for FY 2020-21, the extra cost of filing an ITR-U is 25% of the tax owed plus interest.
Important details required to File Form ITR-U
In ITR-U, the taxpayer needs to determine the amount of additional income that must be taxed under the authorized income categories. There is no need to include a full income breakdown, as there would be with a standard ITR filing In addition to the usual information required (name, PAN, tax years, any extra income reported, etc.), the taxpayer must additionally provide the specific reason for filing the ITR-U Form.
List of Reasons to File Form ITR-U or Updated ITR
- return previously not filed or
- income not reported correctly or
- wrong head of income chosen or
- incorrect rate of tax or
- reduction of carried forward losses,
- reduction of unabsorbed depreciation or
- reduction of Minimum Alternate Tax (MAT) credit/Alternative Minimum Tax (AMT) credit
Important Note: If the taxpayer has selected choices 5/6/7 on Form ITR-U, then the taxpayer must additionally indicate the tax years that are affected by the revised return with respect to any carried forward loss, unabsorbed depreciation, MAT credit, or AMT credit. Also, you must specify whether or not a modified return was submitted for the impacted tax years. In addition, the update income tax return must include the challan information for the additional tax paid.
How can you verify the ITR-U Form?
When an ITR-U is being audited by the government or filed by a political party, only a Digital Signature Certificate (DSC) can be used to verify its authenticity; in all other circumstances, an option to use Electronic Verification Code (EVC) is also provided. A method of confirmation by sending an acknowledgment letter to Bangalore has not been detailed, however.
When are you ineligible to file Form ITR-U?
Those who have already been the subject of a search, survey, or prosecution for the assessment year in question are not eligible to file updated ITR. Even if the taxpayer’s assessment, reassessment, revision, or re-computation for the applicable assessment year is still in progress or has been finalized, they are not permitted to file an updated ITR.
If the updated income tax return will result in no additional taxes owed, the taxpayer is not permitted to submit it under the Act. Therefore, taxpayers cannot submit updated ITR-U if they expect a reduction in their overall tax due, an adjustment of their losses to their income, a refund, or an increase in their refund amount.
Know about the Benefits of Filing Form ITR-U
- After the deadline for submitting an Original ITR, a Belated ITR, or a Revised ITR has passed, taxpayers have until the end of the next calendar year to file.
- To avoid receiving tax notifications or being sued, taxpayers can disclose all income, including those they may have accidentally overlooked.
- In comparison to procedures for concealed income or income evading assessment, tax liability and penalty under Updated Return are lower.
Conclusion
It is important to note that ITR-U is beneficial for taxpayers and a good opportunity to rectify errors. However, Only one Updated ITR per Financial Year is permitted. Thus, It’s important to take your time and do it right and you can also take assistance of experts to avoid the blunders and their consequences.
Accordingly, If you want any other guidance relating to ITR Filling, please feel free to talk to our experts at 8881-069-069.
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