What is ITR – U ?
The Finance Act, of 2022 has presented another idea of updated returns, which has allowed citizens to update their ITRs in somewhere around two years of filling, dependent upon payment of taxes.
Structure ITR-U is advised for people to update their returns within two years from the finish of the pertinent financial year under segment 139(8A) and Rule 12AC. Page 1/4. Taxpayers will have to provide proper reasons for revising the income return not already filed or not reporting the income correctly or choosing the wrong heads of income or reducing carried forward loss.
In layman language: If a person files an income tax return and later realises that they failed to record any income, they have up to two years from the end of the relevant assessment year to revise their return, as per tax rules.
As per the Memorandum to the Budget 2022, “It is proposed to introduce a new provision in section 139 of the Act for filing an updated return of income by any person, whether he has filed a return previously for the relevant assessment year, or not. The proposal for updated return over a period longer than that is provided in the existing provisions of Income-tax Act would on the one hand bring use of huge data with the IT Department to a logical conclusion resulting in additional revenue realize realization and on the other hand, it will facilitate ease of compliance to the taxpayer in a litigation free environment.”
Reasons for updating your income:
- Return previously not filed
- Income not reported correctly
- Wrong heads of income chosen
- Reduction of carried forward loss
- Reduction of unabsorbed depreciation
- Reduction of tax credit u/s 115JB/115JC
- Wrong rate of tax Others
- There will be a penalty of 25% to 50% on the tax and extra income owned. As indicated by the PTI copy, if the updated ITR is submitted in no less than a year, an extra 25% of the outstanding tax and interest should be paid; whenever submitted following a year however before two years from the finish of the pertinent Assessment Year, the penalty gets up to 50%.
- Furthermore, a citizen’s return would be viewed as invalid in the event that they document a modified return however neglect to cover the extra duties.
Updated Return cannot be filed in the following cases as per Finance Bill, 2022
- If there is a return of a loss
- Decreasing the total tax liability determined on the basis of return furnished
- If it results in refund or increases the refund due on the basis of return furnished
- If an updated return has been furnished by him under this sub-section for the relevant assessment year;
- Any proceeding for assessment or reassessment or recomputation or revision of income under this Act is pending or has been completed for the relevant assessment year in his case.
- The Assessing Officer has information in respect of such person for the relevant assessment year in his possession under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 or the Prohibition of Benami Property Transactions Act, 1988 or the Prevention of Money-laundering Act, 2002 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the same has been communicated to him, prior to the date of furnishing of return under this sub-section.
- If information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return under this sub-section.
- In case of any prosecution proceedings under the Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of furnishing of return under this sub-section.
- If he is such person or belongs to such class of persons, as may be notified by the Board in this regard.