What is ITR U Filing and How Does It Work?

itr u filing

According to the Finance Minister’s announcement of Budget 2022, Taxpayers now have the option to correct their ITR or file an ITR that was previously left by ITR U filing (Updated Income Tax Return).

The Finance Bill 2022 was the vehicle through which the finance minister enacted Section 139(8A) of the Income Tax Act.

Often times when we file our income tax return, we make mistakes or neglect to declare certain income, which we discover later.

So, for a period of up to two years after the conclusion of the relevant assessment year, Section 139(8A) of the Income Tax Act and Rule 12AC of the Income Tax Rules provide taxpayers the opportunity to update their returns or to file a new return in the event that none was previously filed. ITR-U filing was created to improve taxpayers’ tax compliance while preventing legal action.

ITR U Filing Process is done by downloading offline utility from https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns.

ITR-U will take effect on April 1, 2022.

How To File ITR U Online?

ITR U online filing can be done under Section 139(8A) of the Income Tax Act and Rule 12AC of the Income Tax Rules.

Who Can File ITR U Form?

Below mentioned ITR U filing conditions & ITR U eligibility for ITR U Filing:

  • Anyone with income over 2.5 lakh can file updated Return of Income who have not filed Earlier.
  • Make necessary disclosure changes in your income tax return.
  • If you want change or fix head of income.
  • Minimize the carry forward loss.
  • To minimize Unabsorbed Depreciation.
  • To minimize Income Tax Credit.

Who Can’t File ITR U Form?

  • To show loss.
  • The updated return lowers the overall tax liability that was previously stated.
  • The updated return generates a refund or enhances the refund already requested.
  • Return with income below 2.5 lakhs wasn’t filed earlier.
  • If a search or survey has been launched against the taxpayer, the tax office has seized assets or books of accounts, or if there are any ongoing legal procedures or investigations against the taxpayer.
  • If you owe NIL in additional taxes.

Penalty On Filing ITR U:

Without additional taxes, ITR U cannot be filed. Penalty differs in already filed and previously not filed cases.

Previously ITR Not Filed:

Additional taxes, interest and penalties must be paid if the taxpayer has not submitted an Original ITR as required by Section 139(1), a Revision ITR as required by Section 139(5), or a Belated ITR.

  • For Income between 2.5 lakh to 5 lakh
    • Late fee of Rs. 1000/- for the delay in ITR filing under Section 234F.
    • No other additional taxes.
  • For Income above 5 lakhs
  • Tax along with interest under Section 234A, 234B, 234C.
  • Late fee of Rs. 5000/- for the delay in ITR filing under Section 234F.
  • Additional Tax
    • If ITR is going to file up to 12 months till end of relevant financial year – 25% of the total amount of tax and interest as additional tax.
    • If ITR is going to file from 12 to 24 months till end of relevant financial year – 50% of the total amount of tax and interest as additional tax.
    • These taxpayers can, however, submit claims for Advance Tax, TDS, TCS, and Relief in accordance with Sections 89, 90, 90A, 91, 115JAA, or 115JD.

Previously ITR Already Filed:

The following tax must be paid by the taxpayer if they have submitted an Original ITR under Section 139(1), a Revision ITR under Section 139(5), or a Belated ITR under Section 139(4).

Additional tax and interest on increased income after deducting earlier-paid interest.

  • Additional Tax
    • If ITR is going to file up to 12 months till end of relevant financial year – 25% of the total amount of tax and interest as additional tax.
    • If ITR is going to file from 12 to 24 months till end of relevant financial year – 50% of the total amount of tax and interest as additional tax.
    • Such taxpayers can, however, claim a credit for any prior taxes paid.

Note: If ITR under Section 139(1) is not filed earlier, Late Fee under Section 234F must be paid.

  • Interest Rate on Additional Tax
    • If ITR is going to file up to 12 months till end of relevant financial year – additional 25% interest on the outstanding tax balance.
    • If ITR is going to file from 12 to 24 months till end of relevant financial year – additional 50% interest on the outstanding tax balance.

What Is ITR U Filing Date?

Form ITR-U can be filed within two years of the conclusion of the applicable assessment year. As ITR-U has taken effect from April 1, 2022, oldest ITR or oldest non filed ITR which is eligible for updated return is for period of FY 2019-20 or AY 2020-21, which can be filed till 31/03/2023.

Only one updated return of income may be provided for the applicable assessment year. Taxpayers therefore should use extreme caution when submitting Form ITR-U. Revisions to the updated return are not permitted.

It is crucial to keep in mind that the taxpayer can only submit an updated ITR under Section 139(8A) after the deadline for submitting a revised or belated return has passed.

Example: Date for ITRs of all kind for AY 2022–23 has already passed (i.e. 31st December 2022). ITR U can therefore be filed for this AY starting on January 1st, 2023, and ITR U filing date for AY 2022-23 is March 31st, 2025.

For FY 2019-20 or AY 2020-21 – can be filed upto 31/03/2025 with 50% additional tax.

For FY 2020-21 or Ay 2021-22 – Can be filed upto 31/03/2024 with 50% additional tax, and with 25% additional tax upto 31/03/2023.

For FY 2021-22 or AY 2022-23 – Can be filed upto 31/03/2025 with penalty, and with 25% additional tax upto 31/03/2024.

Conclusion:

  • Return can be updated only once for particular FY.
  • ITR-U cannot be filed if there is no additional liability.
  • Person with income between 2.5 to 5 lakhs can also file ITR-U by paying late filing fees of Rs.1000.
  • ITR-U can be filed only after the deadline for the revised return and the belated return has passed or lapsed.
  • Whether or not a taxpayer has submitted his first, revised, or delayed return of income, he may nonetheless file an updated return.
  • Many people think, can I file ITR for last 3 years now, so yes i.e for FY 2019-20, FY 2020-21 and FY 2021-22.

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