What is ITR-U?

The ITR-U form is used to make changes to your income tax return. In the Union Budget 2022, the government introduced the idea of updated returns.

Have you ever misrepresented your income on your ITR or neglected to report it?

You have two years to update your ITR under the Income Tax Act's Section 139(8A). From the end of the year in which the initial return was filed, two years will be counted. ITR-U was introduced with the intention of maximizing taxpayer tax compliance without triggering legal action. Find out more about ITR-U by reading on.

A new Form ITR-U has been issued by the Central Board of Direct Taxes (CBDT) for the purpose of updating Income Tax returns. In this form, taxpayers will be required to provide the precise reason for filing along with the amount of income that will be subject to taxation. Taxpayers will be able to use the brand-new Form ITR-U to update their income tax returns for the fiscal years 2019–20 and 2020–21. This article provides an overview of the Form ITR-U for submitting an Updated Return.

Who Qualifies to Submit Form ITR-U?

In the event of an omission, error, or incorrect statement on a previous income tax return, any taxpayer can submit an updated return, regardless of whether he or she previously submitted an original, revised, or late return.

You can file an updated return if:

• Return not filed previously

• Incorrectly reported earnings

• Choosing the wrong income sources

• Reduction in losses carried forward

• Decrease in the amount of unabsorbed loss

• 115JB/115JC's tax credit reduction

• wrong tax rate

Who is unable to submit an ITR-U?

The following situations prevent the filing of an ITR-U:

• Already filed is the updated return.

• for submitting a loss or nil return

• for claiming the refund or increasing its value.

• When a revised return reduces tax liability

• You have been the subject of a search proceeding under section 132.

• Under 133A, a survey is carried out.

• Under section 132A, the Income Tax authorities can seize or demand the return of assets, documents, or books.

• if an assessment, reassessment, revision, or recalculation is in progress or finished.

• You cannot file an Updated ITR if there is no additional tax outgo (when the tax liability is adjusted for TDS credits or losses and there is no additional tax liability).

What is the deadline for submitting the ITR-U?

A revised return must be filed within 24 months of the end of the relevant assessment year. As a result, updated returns for AY 2020-21 and AY 2021-22 can be provided during the current fiscal year, 2022-23.

Should you pay more tax when you file an ITR-U?

Yes, depending on when you file the ITR-U, you will be required to pay an additional tax of either 25% or 50% of the tax amount.

• 12 months from the end of relevant AY   -   25% of additional tax + interest

• 24 months from the end of relevant AY   -   50%  of additional tax + interest

What information is required to submit Form ITR-U?

The taxpayers are asked for the following additional information by ITR-U:

Part A - General Information (ITR-U)

This section of the ITR-U asks taxpayers for general information about how to file an updated return. It has the following components:

• Is it possible for you to submit an updated return? i.e., a person is not in a situation where they cannot file an updated return.

• Choosing the ITR form to use for the updated return

• a rationale for adjusting income. This includes reasons like not filing returns before, reporting income incorrectly, selecting the wrong heads of income, and so on.

• Do you submit an updated return within 12 months of the end of the relevant AY or between 12 and 24 months?

• Are you updating your return to reduce carried forward loss, unabsorbed deduction, or a tax break?

Part B – Computation of updated income and tax payable (ITR-U)

Heads of income for which additional income is reported are included in this section of the ITR-U. Only the amount of additional income is required to be mentioned by the taxpayer. The assesses additional tax liability on the updated return will be calculated using the total income reported in Part B of the ITR form.

Summary:

Under section 139(8A) and Rule 12AC, individuals are required to update their income using Form ITR-U within twenty-four months of the end of the relevant assessment year. The reasons for updating the income must be provided by taxpayers submitting an ITR-U: Return that was not filed before. Errors in reporting income. Contact us to file your return at my financial advisory.