Understanding ITR-U: Key Guidelines for Updated Return Filing

Overview of ITR-U: Updated Return Filing

On April 29, 2022, the Income Tax Department introduced Form ITR-U, which allows eligible taxpayers to file updated returns for the financial year 2019-20 and subsequent assessment years. This filing is governed under Section 139(8A) and Rule 12AC of the Income Tax Rules. Taxpayers may submit only one updated return per assessment year, following the relevant provisions of the Income Tax Act.

When Can ITR-U Be Filed?

Taxpayers can utilize Form ITR-U under the following circumstances:

• The return was previously not filed.
• Income was not reported accurately.
• Incorrect heads of income were chosen.
• Reduction of carried forward losses.
• Reduction of unabsorbed depreciation.
• Reduction of tax credit under Section 115JB/115JC.
• Application of the wrong rate of tax.

When ITR-U Cannot Be Filed

The ITR-U form cannot be used in the following situations:

• Filing a NIL return.
• Filing a loss return.
• Increasing a refund or claiming a refund.
• Initiation of search, survey, or prosecution proceedings for the relevant assessment year.
• Pending or completed assessment, reassessment, revision, or recomputation for the relevant assessment year.

Important Note:

The Act does not permit the filing of an updated return if there is no additional tax liability.

Fees and Additional Payments

• Late fees and additional charges will apply as per the regulations.
• Challan details for additional payments are governed under Section 140B.

Verification Process for Updated Returns

• For Tax Audit Cases: A digital signature is required.
• For Non-Tax Audit Cases: An Electronic Verification Code (EVC) option will be available.
• The option to send returns via courier to Bangalore is currently unspecified.

Additional Interest Payments

Taxpayers must pay additional interest on the due tax amount, as outlined below:

S.No	Particulars	Rate of Interest
1	If updated ITR is filed within 12 months from the end of the relevant assessment year	25%
2	If updated ITR is filed after 12 months but before 24 months from the end of the relevant assessment year	50%

Government’s Perspective

The government aims to provide taxpayers with an opportunity to disclose previously omitted income, which, in turn, is expected to enhance revenue collection. This initiative is intended to foster compliance within a litigation-free environment, making it beneficial for both the taxpayer and the government.

This structure and presentation of the ITR-U updated return filing process aims to provide clarity while maintaining compliance with legal standards.