All about Form ITR U- an Updated Income Tax Return under Income Tax Act

In the Union Budget 2022, the Government of India introduced a provision stating the filing of an Updated Income Tax Return. Under the said provision, a taxpayer can update his/her Income Tax Returns within 2 years if filing the same, by paying additional taxes in the cases where errors or omissions occur. For this purpose, the Government has introduced a new ITR Form namely, Form ITR U. This move was taken to help the taxpayers correct any discrepancies or omissions. This form i.e. Form ITR U under section 139(8A) and Rule 12AC of Income Tax rules, was notified on the 29th of April, 2022.

To file an updated IT returns (ITRs), the taxpayers will have to mention the exact cause or reason for filing it along with the amount of income to be offered to tax. In this article let us find out What is Form ITR U?, How to file Form ITR U?, Who can file an updated Income Tax Return in Form ITR U? etc.

What is the Form ITR U?

The new ITR Form U, is a form to file an Updated Income Tax Return, wherein a taxpayer can update his/her previously filed Income Tax Return within 2 years by paying additional taxes.

Information to be filed in Form ITR U

• In Form ITR U, the taxpayer will require to mention all the exact reasons for filing the updated ITR (Income Tax Return) previously not filed or income reported wrongly or under the wrong heads of income chosen or the reduction of carried forward loss.

• There are reasons like reduction of unabsorbed depreciation or reduction of tax credit under section 115JB / 115JC or wrong rate of tax or any other reasons that a taxpayer may state, to be mentioned in the Form ITR U.

• The taxpayer will also be required to mention the amount of income liable to tax.

• However, he/she will not be required to provide income break-up for the same.

Who can file an Updated Income Tax Return in form ITR U?

• Any taxpayer who is eligible to update returns for Financial Year 2019-20 and following assessment years as per the provisions mentioned in the Income Tax Act can file the updated Income Tax Return via form ITR U.

• It is important to note here that one can file only one updated IT return for each Assessment Year. For the following cases, a taxpayer can file Form ITR U:

• If a taxpayer missed filing a return previously.

• If the income was reported wrongfully.

• When the taxpayer chose the wrong head of Income.

• If there is a reduction of carried forward losses, Unabsorbed Depreciation or Tax Credit under section 115JB / 115JC.

• The income tax was filed at the wrong rate of tax.

While in the following cases, a taxpayer would not be allowed to file Form ITR U:

• In cases of NIL or Loss of Return Filing

• When there is an increase in Refund / Claiming Refund.

• Where there is Search / Survey / Prosecution proceedings are initiated by the Income Tax Department for the said Assessment Year.

• When there is an Assessment or Reassessment or Revision or Re-computation is Pending or Completed for Said Assessment Year.

Rate of interest for Additional Tax Payment

• As per the provisions of the Income Tax Act, if a taxpayer files his updated Income Tax Return in Form ITR U within 12 months from the end of the relevant Assessment Year, he will require to pay an additional interest at the rate of 25% on the tax amount due.

• However, if the taxpayer files the updated ITR, after the 12 months but before 24 months from the end of relevant AY, he shall have to pay additional interest on the due amount of tax at the rate of 50%.

• That means, the taxpayers who wish to update their Income Tax Return and file form ITR U online for Financial Year 2019-20, shall have to pay the tax due and interest, along with an additional amount at the rate of 50% of such tax and interest payable. While for those who want to file Form ITR U (Updated Income Tax Return) for FY 2020-21, the additional amount of interest would be 25%.

Verification of the Updated Income Tax Return

• In cases of Tax Audit or filing of an ITR by any political party, Form ITR U can be verified only via Digital Signature Certificate (DSC).

• While in for non-audit cases, a taxpayer can file form ITR U via Electronic Verification Code i.e. EVC.

• However, there has been no specification given for the option of verification by sending an acknowledgment to Bangalore as it is in normal ITR verification.

The introduction of an updated Income Tax Return in form ITR U is a welcome move by the Government. It shows the Government’s attempts to provide an opportunity to the taxpayers to reveal their correct income that was omitted to be revealed in the previous Financial years. This step will generate more revenue for the Government, hence, it is beneficial to the Government as well.