All about Updated Return ITR U

Hello everyone!! Welcome back to the TAX DESTINATION blog once again.We are here to bring you one more trending and important content. 

The Budget 2022-23 has permitted taxpayers to update their ITRs & to file ITRs if they missed filing within two years from the end of Relevant AY, subject to payment of taxes, a move aimed at helping correct any discrepancy or omissions. 

Further,  CBDT Notifies vide Notification No. 48/2022-Income Tax Dated- 29.04.2022 Form (ITR-U i.e. Updated Income Tax Return under Section 139(8A) of the Income Tax Act)and Manner for filing this return.

There is a lot of confusion regarding the same among many about what exactly it is about??

We got the following repeated queries from many of our Audience. To help you understand this provision more in-depth we are releasing this blog.

01. Can we file ITR for FY 19-20, 20-21 during Current AY?

2) If so, by what date do we need to file the same?

3) In which form of ITR, does it need to be filed?

4) How much additional tax needs to be paid?

5) Reasons for which ITR ‘U’ CAN be filed?

6) Reasons for which ITR” U” CAN NOT be filed? 

7) What other conditions are specified for the same?

Happy reading!!

01. Can we file ITR for FY 19-20, 20-21 during Current AY?

Yes, we can. In the Income-tax (Eleventh Amendment) Rules, 2022 notified on Friday, the  CBDT  said this facility for updating tax return is applicable for the assessment year starting 1 April 2020 (i.e, For FY 19-20) and subsequent assessment years and have to be filed in form ITR-U. Taxpayers will have to give reasons for updating their income.

In layman language (ITR-U) will be available to taxpayers for filing updated income tax returns for Financial Year (2019-20 and 2020-21 ) in the current year. For Filing ITR for FY 21-22, You can follow the normal procedure for filing.

2) If so, by what date do we need to file the same?

A taxpayer can file an Updated ITR under Section 139(8A) of the Income Tax Act within 24 months from the end of the relevant assessment year. The CBDT in its notification specifies that the taxpayers can file an Updated ITR from AY 2020-21.

For example: For FY 2019-20 i.e. AY 2020-21, the taxpayer can file an Updated ITR within 24 months from 31st March 2021. Thus, the due date to file ITR-U for AY 2020-21 is 31st March 2023. Likewise, for FY 2020-21 It will be 31 Mar 2024.

It is important to note that the taxpayer can file Updated ITR u/s 139(8A) only once the time limit for filing Original ITR u/s 139(1), Revised ITR u/s 139(5) or Belated ITR u/s 139(4) has lapsed.

3) In which form of ITR, does it need to be filed?

The taxpayer can file an updated return of Income in Form ITR-U along with the applicable ITR Form from ITR-1 to ITR-7.

4) How much additional tax needs to be paid?

An additional 25 per cent on the due tax and interest would have to be paid if the updated ITR is filed within 12 months, while the rate will go up to 50 per cent if it is filed after 12 months, but before 24 months from the end of relevant Assessment Year.

Also, if a taxpayer files an updated return and does not pay the additional taxes then the return would be rendered invalid.

For ex., If you file FY 20-21 ITR within 12 months from the end of AY (21-22) I.e, 31/3/2023. Then only 25% of the tax due can be paid as interest if you paid within 25 months i.e, 31/3/2024 then 50% of the tax due.

5) Reasons for which ITR ‘U’ CAN be filed?

• ITR previously not filed

• Income not reported correctly 

• Wrong heads of income chosen

• Reduction of carried forward loss

The reasons given in the form also include reduction of unabsorbed depreciation or reduction of tax credit u/s 115JB/115JC or wrong rate of tax or any other reasons given by the taxpayers.

6) Reasons for which ITR” U” CAN NOT be filed? 

The taxpayer cannot file an Updated ITR in the following cases:

• To report a loss

•  The updated return reduces the total tax liability declared earlier

•  The updated return results in a refund or increases the refund claimed  earlier

• If a search or survey has been initiated against the taxpayer, books of accounts or assets have been confiscated by the tax authority or there are any pending proceedings or prosecutions against the taxpayer.

7) What other conditions are specified for the same?

• The return has to be verified either by digital signature or by electronic code depending on the class of taxpayer. Those requiring tax audits have to use electronic signatures. The option of verification by posting the acknowledgement to Bangalore has not been specified,

• A taxpayer would be permitted to file only one updated return per assessment year.

• This facility of filing returns after the end of the assessment year is available irrespective of whether a return has already been filed or not.

• This return cannot be updated again once filed.

So friends this is all about Updated return, hope we tried to clarify all your doubts regarding the same.

For more trending content stay tuned & share our blog as you always do

CA Swathi Agarwal 

TD