What is ITR U, how to file it & types of return to file under ITR-U

The Union Budget introduced the concept of an "Updated Return" (ITR U) in 2022. This allows individuals to correct errors or file previously missed income tax returns under Section 139(8A). Essentially, it provides an opportunity to rectify past tax filings.

What type of returns can be Filed as Updated Returns through Form ITR U?

Original Return: If the return is not filed within the itr last date and the belated itr last date.

Belated Return: Filed within the itr last date but there are errors in initially filed returns.

Revised Return: Return is corrected but still contains inaccuracies.

Which corrections can be made in an Updated Return through Form ITR U?

• Increase in Income
• Change in head of income
• Correction in tax rate
• Reduction in carried forward loss
• Reduction in depreciation
• Reduction in the tax credit u/s 115JB/115JC

If filing an updated return for a previous year results in a reduction of carried-forward losses (including unabsorbed depreciation and tax credits) for any subsequent years, then an Updated Return must also be filed for each of those subsequent years.

Which corrections are not allowed in Updated Return through Form ITR U?

• One updated return is already filed for the AY
• Filing of Nil return/loss return
• Updated return is for claiming/enhancing the refund amount.
• If tax liability is reduced in updated return
• If there is search proceeding initiated against you u/s 132
• If a survey is conducted, Books, documents or assets are seized by the Income Tax authorities u/s 132A.
• If assessment/reassessment/revision/re-computation is pending
• If there is no additional tax liability (when the tax liability is adjusted with TDS credit/ losses and updated return does not result in any additional tax liability)

Time Limit and Additional Tax liability for filing updated return through Form ITR U

The deadline for filing an Updated Return (ITR U) is 24 months after the end of the relevant assessment year.

• For Assessment Year 2022-23: The last date to file ITR U is March 31, 2025.
• For Assessment Year 2024-25: The last date to file ITR U is March 31, 2027.

Additional Tax Liability- An additional tax of 25% or 50% on the tax amount along with the late fees is charged on the updated return depending on when you file the ITR U. Additional Tax rate applies on the additional income tax i.e. Updated tax liability - Previously filed tax liability and interest thereon.

ITR-U filing timeline

Additional Tax rate

• 12 months from the end of AY- 25% of additional tax
• 24 months from the end of AY- 50% of additional tax

Procedure to Filing Form ITR U-

Filing an Updated Return (ITR U) involves amending a previously submitted income tax return. This detailed process allows taxpayers to correct errors or omissions in their original filing.

• Access the e-Filing Portal by visiting the official income tax e-filing website. Log in using your PAN as your username. If you're a new user, register with your PAN, full name, and date of birth to create an account.
• On the e-Filing Dashboard on the login page. Click on the 'e-File' menu and then chose 'File Income Tax Return' from the given options.
• On the next page, you will be prompted to choose the relevant Assessment Year (A.Y.) for which the updated return is to be filed.
• After that, choose 'Updated Return under Section 139(8A)' as the type of filing. This option is designed for those who need to amend their previously filed income tax returns.
• The further procedure is the same as filing normal ITR.

Difference between Belated, Revised Income Tax Returns vs ITR U-

• Belated Return: It is filed after the last date of filing ITR (July 31st) and before December 31st of the assessment year. It involves a penalty for late filing.
• Revised Return: It is filed to correct errors or omissions in a previously filed (original or belated) return. Can be filed before December 31st of the assessment year.
• Updated Return (ITR U): Allows for corrections or updates to previously filed ITRs within two years of the assessment year's end. However, it cannot be used to claim refunds or carry forward losses.

Conclusion

ITR U provides a valuable option for taxpayers who need to correct errors or update their previously filed income tax returns. By allowing amendments within two years of the assessment year's end, ITR U helps ensure accurate tax records and minimizes potential penalties.