Updated Income Tax Return (ITR-U)

ITR-U: The Updated Income Tax Return - Belated Returns for the Last 3 Years

The Income Tax Department of India has introduced a facility known as ITR-U (Updated Income Tax Return), which allows taxpayers to correct errors or omissions in their previously filed returns. The introduction of ITR-U aims to ease the process of filing belated returns for individuals and businesses, ensuring compliance and offering the opportunity to rectify mistakes in earlier submissions.

 

What is ITR-U?

ITR-U stands for Updated Income Tax Return. It is an initiative by the Income Tax Department that allows taxpayers to file or amend their returns for the last three assessment years (AY). Under Section 139(8A) of the Income Tax Act, this facility gives individuals, HUFs, and businesses the opportunity to rectify errors, report missed income, claim missed deductions, or revise their returns.

 

Why File an ITR-U?

Many taxpayers realize after filing their returns that they made an error, missed claiming deductions, or omitted some income. Previously, it was impossible to rectify such mistakes after the deadline had passed. Now, with ITR-U, taxpayers can rectify such issues even after the due date for filing the original return has passed. The key reasons for filing ITR-U include:

  • To Correct Mistakes or Omissions: If you missed reporting some income or claimed incorrect deductions, ITR-U offers a chance to correct it.
  • To Claim Tax Benefits Missed in Previous Returns: Sometimes, eligible deductions or exemptions are missed, such as those under Section 80C, 80D, etc.
  • To Avoid Penalties: Filing an updated return helps avoid penalties or scrutiny by the Income Tax Department.
  • For Better Financial Management: Proper tax compliance helps you avoid long-term legal issues or unpaid tax liabilities.

 

When Should You File an ITR-U?

As per the guidelines, the following applies to the timing of ITR-U filings:

  • Within 2 Years: A taxpayer can file an updated return within two years from the end of the relevant assessment year (AY).
  • After the Due Date: ITR-U applies even after the due date for filing the original return, which would otherwise be considered as a belated return.

For example, if you wish to file an ITR-U for the financial year 2020-21 (Assessment Year 2021-22), the deadline for filing is March 31, 2023. If you missed the filing date, you can still file the ITR-U up until March 31, 2024.

 

Benefits of Filing an ITR-U

  1. Rectify Errors and Missed Deductions: Fix errors or omissions made in your earlier tax returns.
  2. Avoid Penalties and Prosecution: An updated return reduces the risk of facing penalties or prosecution under Sections 270A, 271(1)(c), or 276C.
  3. Accurate Tax Calculation: By amending your return, you can reflect the actual tax liability, minimizing the chances of future scrutiny.
  4. Revised Tax Refund: If you missed claiming deductions or exemptions, filing ITR-U can help increase your refund.
  5. More Time for Rectification: ITR-U gives taxpayers more time to correct their mistakes, even after the original due date has passed.

 

How to File an ITR-U - Complete Process

Filing an ITR-U is a relatively simple process, but you must be careful to provide the correct information. Below is the step-by-step guide to file an updated return.

  1. Log in to the Income Tax Portal:
  2. Select the ITR-U Form:
    • Once logged in, select the “File Income Tax Return” option.
    • Choose the relevant assessment year (AY) and select ITR-U as the form type.
  3. Fill in the Details:
    • Provide the details of your income, deductions, and tax payable.
    • Amend any incorrect information in the original return.
  4. Verify and Submit:
    • After entering all the required information, verify the details carefully.
    • Submit the updated return.
  5. Payment of Tax (if any):
    • If the updated return results in a higher tax liability, pay the tax due along with interest (if applicable).
    • Use challan to make the payment.
  6. Submit and Download the Acknowledgement:
    • After submission, download the acknowledgement for your records.
    • This serves as proof of your updated filing.

 

Documentation Required for Filing ITR-U

When filing an updated return, the documentation required remains the same as filing the original return. Key documents include:

  • PAN Card: Your Permanent Account Number details.
  • Bank Statements: To report income from interest, dividends, etc.
  • Form 16: Provided by your employer detailing your salary and tax deductions.
  • Proof of Deductions: Documents supporting any claims for deductions (Section 80C, 80D, etc.).
  • Other Income Proofs: Such as income from investments, business income, etc.
  • Challan for Tax Payment: If the updated return results in additional tax liability.

 

Government Fee for Filing ITR-U

As per the latest notification from the Income Tax Department, taxpayers are required to pay a penalty while filing an updated return, depending on the type of return:

  • For returns filed within 12 months from the due date: ₹5,000 for taxpayers whose total income exceeds ₹5 lakh.
  • For returns filed after 12 months but before 24 months: ₹10,000.

For taxpayers with income below ₹5 lakh, the penalty is limited to ₹1,000, irrespective of the delay.

 

Worthy of Attention: Acts, Rules, Notifications & Circulars

  • Section 139(8A) of the Income Tax Act, 1961: Provides for filing an updated return.
  • Notification No. 30/2022: Issued by the Income Tax Department regarding ITR-U provisions.
  • Circular No. 11/2022: Details on the implementation and process of filing updated returns.

 

Frequently Asked Questions (FAQs)

1. Can I file an ITR-U if I have already filed a belated return? Yes, you can file an ITR-U to update or rectify errors in your belated return.

2. What happens if I file an incorrect ITR-U? If you make a mistake, you can file a revised updated return, but the process must be completed within the allowed time frame.

3. How do I make the payment for additional tax after filing ITR-U? You can make the payment via the Income Tax Department's online payment portal using Challan 280.

4. What is the last date for filing ITR-U? You can file an updated return within two years from the end of the relevant assessment year.

 

Conclusion: File Your ITR-U Today!

Filing an updated return (ITR-U) is an excellent opportunity to ensure that your tax returns are correct and up-to-date. Whether it’s missing income, deductions, or errors, ITR-U can help you rectify mistakes and save you from potential penalties or legal issues.

If you need assistance or have any doubts regarding filing your ITR-U, Chhabria Associates is here to help!

📞 Call: 9289521162
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📧 Email: chhabriaca@gmail.com
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Contact us today and ensure your taxes are filed accurately!