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ITR-U: Updated Income Tax Return

by | May 8, 2024 | Income Tax, Income Tax filing | 0 comments

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Important Keyword: ITR-U, Updated Return.

ITR U: Updated Income Tax Return

The Budget 2022 brought a significant change in the realm of income tax filing by introducing the option for taxpayers to rectify errors or omissions in their previously filed Income Tax Returns (ITRs) through an Updated Income Tax Return (ITR-U). This move, outlined in Section 139(8A) of the Income Tax Act, offers relief to taxpayers who may have overlooked certain details or made mistakes in their initial filings.

Following the Budget announcement, the Central Board of Direct Taxes (CBDT) issued a crucial notification on April 29, 2022. This notification introduced the prescribed form, Form ITR-U, for filing Updated Income Tax Returns under Section 139(8A) of the Income Tax Act. As a result, starting from Assessment Year 2020-21 onwards, taxpayers have the opportunity to submit an updated return of income using Form ITR-U, alongside the applicable ITR Form ranging from ITR-1 to ITR-7.

What is Section 139(8A) of the Income Tax Act? – Updated Return

Section 139(8A) of the Income Tax Act outlines the eligibility and restrictions for filing an Updated Income Tax Return (ITR-U). According to this provision, taxpayers who have previously filed an Original ITR under Section 139(1), Revised ITR under Section 139(5), Belated ITR under Section 139(4), or have not filed an ITR at all, have the option to submit an ITR-U within 24 months from the end of the relevant assessment year.

However, certain conditions apply, and taxpayers cannot file an Updated ITR in the following scenarios:

  1. Reporting a loss.
  2. Reducing the total tax liability declared earlier in the filed returns.
  3. Claiming a refund or increasing the refund amount previously claimed.
  4. Being subject to a search or survey initiated by tax authorities, confiscation of books of accounts or assets, or facing pending proceedings or prosecutions.
  5. Having taxable income below INR 2,50,000 (i.e., below the basic exemption limit).
  6. Having no additional tax liability.

In essence, taxpayers can file an Updated Return to declare previously unreported income and are prepared to pay additional tax on it. It’s important to note that an Updated ITR can only be filed once and cannot be revised after submission. This limitation ensures that taxpayers adhere to accurate reporting and timely compliance with tax regulations.

Form ITR-U Updated Return

What is the Due Date for filing an Updated Return i.e. ITR-U?

Under Section 139(8A) of the Income Tax Act, taxpayers have the option to file an Updated Income Tax Return (ITR-U) within 24 months from the end of the relevant assessment year. The Central Board of Direct Taxes (CBDT) notification specifies that taxpayers can file an Updated ITR starting from Assessment Year (AY) 2020-21.

It’s essential to understand that taxpayers can file an Updated ITR under Section 139(8A) only after the time limit for filing a Belated ITR under Section 139(4) or Revised ITR under Section 139(5) has expired.

For instance, for AY 2022-23, if the due date to file a belated return has passed (i.e., December 31, 2022), taxpayers can begin filing ITR-U from January 1, 2023, onwards. The last date to file such an Updated ITR for this assessment year would be March 31, 2025.

Penalty on Filing ITR U – Pay Additional Tax under Section 140B of the Income Tax Act

When filing an Updated Income Tax Return (ITR-U) under Section 139(8A) of the Income Tax Act, taxpayers must ensure payment of any additional tax and penalty as per Section 140B. Here’s how the process varies depending on whether the taxpayer has filed an ITR earlier or not:

Case 1: Not filed ITR earlier

If the taxpayer hasn’t filed an Original ITR under Section 139(1), Revised ITR under Section 139(5), or Belated ITR under Section 139(4), they need to pay:

Tax dues along with interest under Section 234A, 234B, 234C Late fee under Section 234F for the delay in filing ITR Additional tax If filing after the expiry of the time limit for a revised or belated ITR but before 12 months from the end of the relevant assessment year, an additional tax of 25% of the aggregate amount of tax and interest is applicable If filing after 12 months but before 24 months from the end of the relevant assessment year, an additional tax of 50% of the aggregate amount of tax and interest applies However, these taxpayers can claim credit for Advance Tax, TDS, TCS, and Relief under Sections 89, 90, 90A, 91 115JAA, or 115JD.

Case 2: Has filed ITR earlier

If the taxpayer has filed an Original ITR under Section 139(1), Revised ITR under Section 139(5), or Belated ITR under Section 139(4), they need to pay:

Tax on additional income along with interest after reducing any interest already paid earlier Additional tax Similar to Case 1, if filing after the expiry of the time limit for a revised or belated ITR but before 12 months from the end of the relevant assessment year, an additional tax of 25% of the aggregate amount of tax and interest is applicable. If filing after 12 months but before 24 months from the end of the relevant assessment year, an additional tax of 50% of the aggregate amount of tax and interest applies. However, these taxpayers can claim credit for any taxes paid earlier.

Summary – Tax Liability and Additional Tax u/s 140B

When is the Updated Return filed?If ITR has been filed earlierIf ITR has not been filed earlier
In the first year after the end of the relevant AY
(ITR-U filed after the expiry of the time limit for revised or belated ITR but before completion of 12 months from the end of relevant AY)
Tax Payable on Additional Income

ADD: Interest on Tax Payable

ADD: Additional Tax at 25% of Tax Payable + Interest
Tax Payable on Total income after reducing tax credits

Add: Interest on Tax Payable

Add: Late Fee u/s 234F

ADD: Additional Tax at 25% of Tax Payable + Interest
In the second year after the end of the relevant AY
(ITR-U filed after the expiry of 12 months from the end of the relevant assessment year but before the completion of 24 months from the end of the relevant AY)
Tax Payable on Additional Income

ADD: Interest on Additional Income

ADD: Additional Tax at 50% of Tax Payable + Interest
Tax Payable on Total income after reducing tax credits

Add: Interest on Total Income

Add: Late Fee u/s 234F

ADD: Additional Tax at 50% of Tax Payable + Interest

Computation of Tax Payable with Updated Return

 ParticularsAmount
 Total Tax on IncomeXXXX
Less:Advance Tax(XXXX)
Less:TDS (Tax Deducted at Source)(XXXX)
Less:TCS (Tax Collected at Source)(XXXX)
Less:Self Assessment Tax(XXXX)
Less:Relief u/s 89/90/90A/91(XXXX)
Less:Tax Credit u/s 115JAA/115JD(XXXX)
 Basic Tax PayableXXXX
Add:Interest u/s 234A, 234B, 234CXXXX
 Tax PayableXXXX
Add:Additional Tax (25% or 50%) on Tax PayableXXXX
 Total Tax PayableXXXX

Note: Late Fee under Section 234F must be paid if ITR under Section 139(1) is not filed earlier. An additional tax rate is not applied to fees under section 234F.

Difference between Updated ITR u/s 139(8A) and Revised ITR u/s 139(5)?

A taxpayer can file an Updated ITR even if an original or belated ITR has not been filed. However, the taxpayer cannot file a Revised ITR if an original or belated ITR has not been filed.

The taxpayer need not pay any penalty for filing a Revised ITR. However, the taxpayer must pay a penalty in the form of an Additional Tax of 25% to 50% as per Section 140B for filing an Updated ITR.

Updated ITR can be filed only if there is an additional tax liability and not if there is a reduction in tax liability or an increase in the refund or claiming a loss. Revised ITR can be filed for multiple reasons such as claiming a loss, increasing a refund, reduction or increase in tax liability, etc.

The taxpayer can file a Revised Return multiple times while an Updated ITR can only be filled once.

Read More: AIS (Annual Information Statement)

Web Stories: AIS (Annual Information Statement)

Official Income Tax Return filing website: https://incometaxindia.gov.in/

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