How to file updated Income Tax Return: What is ITR-U

Basically, the main motive of updated Income Tax Return is to update the ITR by correcting or rectifying errors or any kind of omissions for up to 2 years from the end of the particular assessment year. It is very useful for one who has forgotten to report or mention their income in the ITR and for those who made mistakes in their ITR.

Under the Income Tax Act 1961, section 139 (8A) allows and gives a chance for the person to update the Income Tax Return within 2 years. These two years are calculated from the end of the year in the aspect of the person in which he/she has filed the original Income Tax Return.

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

The Union Budget of 2022 introduced the ITR U form, facilitating taxpayers in rectifying errors or omissions on their income tax returns. With ITR-U, individuals can amend their returns within two years from the conclusion of the relevant assessment year, providing a window for correcting inaccuracies or false entries.

Section 139(8A) of the Income Tax Act grants taxpayers the opportunity to update their ITR within a 24-month period following the end of the relevant assessment year, offering relief to those who may have failed to file or submitted erroneous information in their returns.

The main purpose of introducing this ITR U is to optimize tax compliance by taxpayers without calling or provoking any legal action. Before knowing how to file the ITR U, one must be well clear with who should or who can file the ITR U.

Who can file the ITR-U?

• The one who did not file the Income Tax Return and failed to file before the deadline.
• The one who has mentioned the wrong head of income.
• For the one whose Income is not declared correctly.
• The one who chose the wrong head of income.
• The one who has paid the tax at the wrong rate.

Who cannot file an ITR-U?

• When the updated Income Tax Return is in the return of loss.
• When the updated return reduces Income Tax Liability in the return which was filed earlier.
• If the updated Income Tax Return results in an increase in refunds.
• When the search has been initiated under section 132.
• Books of Accounts or any other related documents are requisitioned under section 132A.
• When the survey has been conducted under section 133A.
• If there is any proceeding of any assessment, reassessment etc. is pending or completed for that relevant year is not eligible.
• If the officer finds the person having and using black money will be under investigation and will not be eligible.

How to file form ITR-U?

These are the following documents and requirements to file the fore of ITR U.

Part 1

• PAN details of the taxpayer.
• Aadhaar Number of the taxpayer.
• The assessment Year should be mentioned by the taxpayer.
• Whether the income tax return was previously filed by the taxpayer for this assessment year? (Yes/No); should be answered.
• If yes, whether filed under section 139(1).
• If once these mentioned are approved and eligible then the Acknowledgement number or Receipt Number is required and the taxpayer should mention the date of filing the original income tax return.

Part 2

• The Head of Income under which additional income is being returned as per the Updated Income Tax Return.
• It should be mentioned by the taxpayer that the total income as per in the last valid return, it is only applicable if the taxpayer has filed the updated Income Tax Return before.
• The total income of the taxpayer should be mentioned.
• If there is any amount payable should be mentioned and paid for the update.
• If there is any amount that is to be refunded to the taxpayer, it should be collected.
• If it is applicable then the amount payable on the basis of the last valid return should be mentioned.
• It should be mentioned about the Refund claimed as per the last valid return if any.
• It also should be mentioned about the total Refund was issued as per the last valid return.
• Fee for default in furnishing return of income under section 234F.
• If there is any regular assessment tax, it must be shown by the taxpayer.
• Aggregate liability on the additional income of the taxpayer.
• Additional income-tax liability on the updated income of the taxpayer.
• The net amount payable by the taxpayer.
• Tax paid under section 140B should be mentioned.
• Tax due of the taxpayer.
• Taxpayers should mention the details of payments of tax on updated returns under section 140B.
• Details of payments of Advance Tax or Self-Assessment Tax or Regular Assessment Tax, for which credit has not been claimed in the earlier return.

The time limit for filing an updated return is 2 years from the end of the relevant assessment year.

What are the benefits of filing an updated return?

Taxpayers get an additional 2 years to file the Income Tax Returns even after the deadline to file the Original ITR, revised ITR, and belated ITR has lapsed. Taxpayers can report any missed out income of them and pay tax on it, to reduce future consequences like legal notices and litigations. Tax penalty and liability under updated Return is quite less than in case of proceedings for which income escapes assessment or undisclosed income.

Conclusion

To conclude, Updated Income Tax Return is the form which allows taxpayers to update their income tax return by rectifying or correcting the errors or omissions for which the taxpayers have the time to update within 2 years from the end of the particular assessment year. Hence, one should be clear about whether he/she is eligible for filing the ITR U.

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