All about Form ITR-U | Income Tax Updated Return

Form ITR-U ( Income tax updated return) - Latest updates

What is an Income Tax Updated Return (ITR-U)?

The Income Tax Department has established a brand-new idea of an updated return that allows taxpayers to update their ITRs within two years of filing, subject to tax payment.

A new form ITR-U has been introduced where the taxpayer should fill out this form with the actual reason for filing together with the amount of income that will be liable for tax.

Who can file an updated ITR-U?

The Form ITR-U can be used by any individual eligible to update returns for FY 2019-20 and subsequent assessment years according to the relevant provisions of the IT Act. For each assessment year, a taxpayer could only submit one updated return.

Cases in which ITR-U can be filed

ITR-U can be filed for the following reasons: 

  • Previously unfiled return of income 
  • Incorrectly reported income 
  • Adjust or change the head of income 
  • Decrease of the carried forward loss
  • Decrease of unabsorbed depreciation
  • Income tax credit reduction

Cases in which ITR-U cannot be filed

There are several reasons why an ITR-U cannot be filed:

  • Whenever a search is initiated under section 132 of the Income-tax Act or a requisition is made under section 132A
  • When a survey is conducted under section 133A other than under section 133(2A) of the Income-tax Act
  • There is any proceeding for assessment, reassessment, recalculation or revision for that relevant year that is pending or completed
  • If the Assessing Officer has information regarding such person under prevention of money laundering or black money (undisclosed foreign income and asset) and Imposition of Tax Act, Benami Property Transactions Act, or foreign exchange manipulators act, and the same has been communicated to the assessee.
  • If any information is received under an agreement described in sections 90 or 90A of the Income-tax Act

Details required to be mentioned in ITR-U

Using ITR-U, the taxpayer needs to specify only the additional income, under the prescribed income heads, on which tax is to be paid.

As with filing ordinary ITR forms, there is no need to submit a detailed income breakdown.

Also, taxpayers are required to specify the legit reason for filing the updated return in ITR-U.

Additionally, you must include the details of the challan used to pay the extra tax for the revised return.

Deadline for Filing an Income Tax Updated Return (Form ITR-U)

After the end of the specified assessment year, the updated return can be provided within 24 months. For instance, For the assessment year 2022–2023, an updated return may be submitted by 31 March 2025.

Computation of (Income Tax for Updated Return)

In the Income Tax Act 1961, section 140B explains how to calculate income tax on an updated return.

Payable Tax + Interest + Payable Penalties for Income Tax Non-filing (If Any) + Payable Amount as Additional Tax (For Taking Advantage of Section 139(8A)) = Payable Amount. = Total Income Tax Owed

Total Income Tax Liability (as above) – TDS, TCS, Advance Tax, Tax Relief, etc = Net Tax Liability under Section 140B

Additional Tax payment

A new provision called updated return was proposed by the Finance Minister to provide taxpayers with the opportunity to correct errors and mistakes made in the ITR & Annual Information Statement (AIS).

It enables taxpayers to submit an updated return following the payment of additional tax.

In addition to the due tax and interest, an additional 25 % will have to be paid if the updated ITR is filed within 12 months; otherwise, the rate will increase to 50 %  if it is filed after 12 months, but before 24 months from the end of the relevant Assessment Year.

  • Taxpayers who wish to file tax returns for fiscal 2019-20 will have to pay the due tax and interest plus an additional 50 %.
  • The additional sum will be 25% of the outstanding tax and interest for individuals wishing to file for FY 2020–21.

Moreover, if a taxpayer files an updated return but does not pay the additional taxes, the return is invalid.

How to verify the updated return?

An ITR-U can only be verified by a Digital Signature Certificate (DSC) in tax audit cases.

For non-tax audits, a different option, called Electronic Verification Code (EVC), is provided. 

Still, the option to send the acknowledgement to Bangalore hasn’t been specified.

This post on Form ITR-U has come to an end. Share your views and opinions with us in the comment section below.