Correcting Mistakes in Your Income Tax Returns A Comprehensive Guide to ITR-U

Errors or omissions in Income Tax Returns (ITRs) can happen, but there’s no need to panic. The Income Tax Department offers a solution through the Updated Income Tax Return (ITR-U). Let’s explore what ITR-U is, its benefits, who can file it, and the filing process.

What Is ITR-U?

Introduced in the Union Budget 2022, ITR-U allows taxpayers to amend mistakes or omissions in their previously filed returns. It’s also helpful for those who missed filing their original or belated returns. This provision enables you to correct your returns within two years from the end of the relevant Assessment Year.

When Can You Use ITR-U?

From January 1st of the relevant Assessment Year, taxpayers can use ITR-U to correct errors such as missed income or incorrect details. However, it’s important to note that ITR-U cannot be used to:

  • Reduce tax liabilities.
  • Claim additional refunds.
  • Increase losses for future carry forward.

This tool is solely for rectifying mistakes that result in additional taxes being payable.

Cases Where ITR-U Is Not Permitted

Certain situations disqualify taxpayers from filing ITR-U:

  • Filing a nil return or a return with losses.
  • Claiming or increasing refunds.
  • Reducing tax liability from what was originally declared.
  • If assessment or reassessment proceedings are ongoing.
  • When the tax authorities have conducted a search, seizure, or survey.

ITR-U Filing Deadlines

Here are the deadlines for filing ITR-U based on the financial year:

  • FY 2020-21 (AY 2021-22): March 31, 2024
  • FY 2021-22 (AY 2022-23): March 31, 2025
  • FY 2022-23 (AY 2023-24): March 31, 2026
  • FY 2023-24 (AY 2024-25): March 31, 2027

Timely filing is crucial to avoid penalties and maintain compliance.

Who Is Eligible to File ITR-U?

You can file ITR-U in the following circumstances:

  • If you missed filing your original or belated return.
  • If you identified unreported income that needs to be disclosed.
  • If there were errors in selecting the income head or applying the wrong tax rate.
  • If adjustments are required, such as reducing carried forward losses, unabsorbed depreciation, or tax credits under Sections 115JB/115JC.

Note: Only one updated return can be submitted for each Assessment Year.

Additional Tax Implications

Filing ITR-U involves paying an additional tax, depending on the filing timeline:

  • Within 12 months from the end of the Assessment Year: 25% additional tax on the payable amount (tax + interest).
  • Between 12 to 24 months: 50% additional tax on the payable amount.

These charges incentivize timely corrections while promoting better compliance.

Step-by-Step Guide to Filing ITR-U

Step 1: Download the Utility

Step 2: Prepare Your Return

  • Open the utility, input the updated details, and validate your entries. You can use the pre-fill option to simplify the process. After completing the form, generate the JSON file.

Step 3: Calculate and Enter Tax Details

  • Include payment details like the BSR code, deposit date, and serial number in the utility. Validate your entries and finalize the file.

Step 4: Upload the JSON File

  • Log in to the portal, select File Income Tax Return, and choose Section 139(8A) for updated returns. Upload the validated JSON file.

Step 5: Pay Additional Taxes

  • Use Challan 280 to clear any additional tax liabilities. Ensure the payment details are reflected in the ITR-U.

Step 6: Verify and Submit

  • Verify the return using Aadhaar OTP, EVC, or Digital Signature Certificate (as applicable). Once verified, submit the return and download the acknowledgment for future reference.

Disclaimer: Aim of this article is to give basic knowledge about the topic to people who are not in touch with Indian tax norms. When anybody is dealing with these kinds of cases practically, he shall consider all relevant provisions of all applicable Laws like FEMA/Income Tax/RBI /Companies Act etc.

If you have any further questions or need assistance, feel free to reach out to us at admin@ushmaassociates.com or info@nricaservices.com, or contact us via call/WhatsApp at +91 9910075924.

Stay Updated, Stay Compliant

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