ITR-U – What is ITR-U Form and How to File ITR-U?

ITR U is an income tax form utilized by the assessee to update his/her income tax return. Finance Minister Nirmala Sitharaman introduced it in the Union Budget 2022. The ITR U form is used to make the corrections in the return filed by the assessee during a financial year.

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ITR U in Brief

In Union Budget 2022, the Finance Minister of India declared that the taxpayer might avail of the option to update their income tax return via filing the Updated Income Tax Return (ITR-U). The form is used when the assessee notices an omission or error in the filed ITR. 

While introducing the updated return concept, the finance minister also introduced section 139 (8A) of the Income Tax Act in the union budget 2022.

On 29th April 2020, the Central Board of Direct Taxes (CBDT) issued an ITR U notification under the Income Tax Act of 1961. From the assessment year 2020-21, the taxpayer can file an updated ITR-U form along with other suitable forms like ITR-1 and ITR-7.

Section 139(8A)

A taxpayer must submit an ITR-U form for updated returns. The following categories of individuals can file returns under section 139(8A): 

  • Who have not filed returns

  • Who filed returns under section 139(1) – original or

  • Who filed returns under section 139(4) – belated or 139 (5) – revised

  • Who failed to file an ITR may file an updated ITR under section 139 (8A) for up to 2 years or 24 months from the end of the assessment year

However, a taxpayer is not eligible to file an updated ITR in the following circumstances:

  • If the taxpayer wishes only to report a loss

  • To reduce tax liability from what has been defined at the time of tax payment

  • If the ITR shows any refund in the taxes or an increase in the refund of taxes

  • If the action of search and seizure has been initiated against the assessee, tax authority has confiscated assets or account books, or is yet to deal with prosecution or pending proceedings in the court

  • If the taxable income of the taxpayer is below the exemption limit

  • If he is not bound for any additional tax liability

Form U Filing

A taxpayer needs to learn how to complete U filing or ITR U Return. According to rules and provisions, the ITR-U is required to be produced along with the applicable ITR forms, i.e., ITR 1 to ITR 7.

An assessee may find two parts of Form U to file an ITR U Return. The first is part A and the second U filing is known as part B. 

In Part-A, the individual is required to fill in his general information. 

  • In A1, he is required to fill in his PAN, i.e., permanent account number. 

  • In A2, he should fill his name.

  • In A3, he is required to fill in his Aadhaar Card Number.

  • In A4, he should enter the assessment year.

  • In A5, he is required to select yes, if he has filed the return earlier or No if he hasn’t filed it for the assessment year.

  • In A6, select yes at the acknowledgement of ITR if it was filed under section 139(1) of the Income Tax Act.

  • In A7, he should enter form number, along with the acknowledgement and receipt number, and the date of filing of the previous or original return. The assessee may find all these details in the acknowledgement of ITR.

  • In A8, he may check the eligibility terms and conditions and select the most suitable option.

  • In A9, he should select the ITR form number.

  • In A10, the user must select at least one reason for updating the ITR. However, he may select more than one reason, or multiple reasons are allowed to choose.

  • In A11, he should select the '12-24 months’, option if 12 months or one year has passed. Otherwise, he should section the 'up to 12 months' option if more than one year is left.

  • In A12, he should enter yes if he is filing the updated return to reduce the carried forward loss or tax credit or unabsorbed depreciation. Further, he is also required to enter the assessment year in which the loss or depreciation was affected due to the ITR U or updated returns.

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Computation of ITR U Income:

  • The user is required to enter the figures of additional income in the head of income. However, he is not required to provide a detailed break-up of every income. Instead, he should enter the income declared in the last ITR.

  • Enter the total amount of income

  • Enter the amount payable, if any

  • He should enter the amount, if any, for refund.

  • He is required to enter the payable amount of tax in the last return. In addition, if any return was claimed in the previous ITR, the amount must be specified by the assessee. If the assessee has received the refundable amount, he must enter it.

  • Enter the fee paid by him for late filing of ITR, if any.

  • Mention the regular assessment tax he paid during the last return.

  • Specify the aggregate liability on the additional income.

  • Mention additional tax liability on the ITR U.

  • Specify the net tax payable.

In Conclusion

A taxpayer should file ITR U or updated ITR within 24 months or two years from the end of the assessment year. The CBDT sent an ITR U notification declaring that the taxpayers are allowed to file an ITR U from the assessment year 2020-21.

FAQ's

  • Do I need to pay any penalty for an updated ITR?

    The government of India has not levied any penalty for filing updated returns. However, an assessee is required to pay an additional or extra tax under section 140B of the Income Tax Act 1961. The percentage of additional tax is regarded as 25% and 50% of the tax amount if the updated ITR is filed within 12 or 12 months, respectively.
  • Can I file a nil return in the updated ITR?

    A nil return cannot be filed by the assessee if there is no tax outflow. 
  • What are the benefits of filing an updated return?

    The updated return should be filed to avoid scrutiny assessment under section 143(3), evaluation of income escaping under section 147, and assessment of best judgment under section 144 of the Income Tax Act of 1961. One should also avoid search and seizure proceedings due to evasion of taxes.
  • Can I increase my carry-forward loss?

    The assessee can only reduce the balance of carry-forward losses. However, he cannot increase it in any case.
  • Can I file ITR U in case of no tax liability?

    No, an updated return cannot be filed in the absence of tax liability.

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