Updated Return under Income Tax Act (ITR-U)

Updated return under Income Tax Act was introduced in Budget 2022 by insertion of a new section 139(8A) in the Act and this came into effect from 1^st April 2022. As per Section 139(8a) of Income Tax Act, Updated Returns can be filed by the taxpayers who have not filed the return or have filed the returns u/s 139(1)- Original, or 139(4)-Belated or 139(5)-Revised. The Objective behind introducing this facility was to promote voluntary tax compliance and reduce litigation. Updated Returns can be filed by using the form ITR-U and this can be filed once only for a particular year.

Persons eligible to file Updated Return under Income Tax Act

All persons (Individual, HUF, Firms/LLP, Companies, AOP, BOI etc) are eligible to file Updated returns u/s 139(8A) subject to satisfaction of both the following conditions:

(i) The taxpayer has not filed the return of income earlier or there are errors/omissions in original filed return.

(ii) The taxpayer has to disclose any additional income which was missed earlier and should pay some additional taxes.

Persons ineligible to file Updated Return

All persons (Individual, HUF, Firms/LLP, Companies, AOP, BOI etc) are ineligible to file an Updated return in the following cases.

• If it is a Return of Loss.
• If it has the effect of decreasing the tax liability or increasing the refund.
• A search has been initiated u/s 132 or books of accounts or other documents or any assets are requisitioned u/s 132(A).
• A Survey has been conducted u/s 133A other than Section 133A(2A).
• If any Assessment is under process or completed.
• If Assessing Officer has information about the assessee under any specified act.
• If any information has been received u/s 90 or 90A and same has been communicated to assessee before the date of furnishing updated return.
• If any Prosecution proceedings have been initiated before the date of furnishing updated return.
• If the taxpayer belongs to such class of persons as notified by board.

Time limit of filing Updated Return under Income Tax Act

A taxpayer can file an Updated Return of any Financial Year within end of 2 years from the end of the related Assessment Year. Accordingly, last date of filing Updated Return for few recent years is given below.

(i) FY 2020-21: Last date is 31 March 2024

(ii) FY 2021-22: Last date is 31 March 2025

(iii) FY 2022-23: Last date is 31 March 2026

Late Fees & Additional Tax Payable

As per Section 140B of Income Tax Act, an updated return can be filed only by paying some additional tax. The additional tax payable is based upon the number of months delay in filing the Updates Return.

(i) If Updated Return is filed within 12 months from the end of the respective Assessment Year- Additional tax payable is 25% of tax amount (including Surcharge, Cess and Interest).

(ii) If Updated Return is filed after 12 months from the end of the respective AY- Additional tax payable is 50% of tax amount (including Surcharge, Cess and Interest).

A NIL return can not be filed under ITR-U. If tax is NIL, the tax payer is required to pay the required amount of fees for delayed filing of ITR. For the small taxpayers, required late fees is Rs.1000, otherwise late fees is Rs.5000 (maximum).

Change of Tax Regime

The very purpose of Updated return is for providing a facility to taxpayers to rectify the error or omission in the original return, or to file a return if not filed earlier. In the first case, where an original return is filed and taxpayer wants to rectify the error or commission in the original return by filing an Updated Return, the taxpayer is not allowed to choose a tax regime different from that in the original return. But, in case no return for a year is filed by a taxpayer earlier, the taxpayer is permitted to choose his regime of choice at the time of filing Updated Return for that year.

Conclusion

By incorporating Updated Return under Income Tax Act, the government has provided an opportunity to the taxpayers to rectify the mistakes they did at the time of filing the previous return. Moreover, this will reduce the compliance burden of the taxpayers and the copy of ITR can be useful for them to produce as an income proof. Therefore, it is good for the taxpayers to understand the nitigrities of this facility to take the benefit out of it. But as a new concept in the tax structure, it is not very much clear to many of the taxpayers about the process of filing ITR-U which is little bit typical at this stage. So, it is advisable to the taxpayers to take help of a tax consultant for filing their ITR-U.

For understanding the filing process of ITR-U, YouTube Vedio link of IT department-https://www.incometax.gov.in/iec/foportal/help/all-topics/videos/updated-income-tax-return-itr-u

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