CA DK Agarwal

All about updated income tax returns (ITR-U)

The CBDT has inserted Section 139(8A) Of Income-Tax Act, 1961 and Rule 12AC of Income Tax Rules to furnish an updated return. That is:-

“Any person, whether or not he has furnished a return under sub-section (1) or sub-section (4) or sub-section (5), for an assessment year (herein referred to as the relevant assessment year), may furnish an updated return of his income or the income of any other person in respect of which he is assessable under this Act, for the previous year relevant to such assessment year, in the prescribed form, verified in such manner and setting forth such particulars as may be prescribed, at any time within twenty-four months from the end of the relevant assessment year”

What is Form ITR-U?   

According to section 139(8A) of Income-Tax Act, 1961 you can furnish an updated ITR within 24 months from the end of the year in which the original ITR was filed.

In what circumstances an updated return can be filled?

Following are the circumstances to file an updated return:-

  1. Any person who has not furnished his return of income, or has furnished:-
    1. His original return of income, or
    1. Belated return, or
    1. Revised return.
  2. If income do not reported correctly.
  3. If income shown under wrong head.
  4. To reduce carried forward losses.
  5. To reduce unabsorbed depreciation.
  6. To reduce tax credit under section 115JB (Minimum alternate tax)/115JC (Alternate minimum tax).
  7. If tax is calculated wrongly.

In what circumstances an updated return cannot be filed?

Following are the circumstances in which updated return cannot be filed if:-

  • An updated return is return of loss.
  • An updated return is to reduce income tax liability in earlier filed return.
  • An updated return is filed to increase refund of tax.
  • Any search has been initiated under section 132 i.e search & seizure.
  • Any survey has been conducted under section 133A.
  • Assessing Officer has any information against such person under prevention of Money laundering Act, Black Money, Benami Property transactions Act, Foreign exchange manipulators Act.
  • Search or survey or prosecution proceedings are initiated against the person for the relevant assessment year.
  • Assessment, reassessment, revision, re-computation is pending or completed for the relevant assessment year.

What is the time limit to file ITR-U?

According to section 139(8A), Form ITR-U can be furnished within 24 months from the end of relevant assessment year. This section have come into effect from 01.04.2022. Hence updated returns for AY 2020-21 & AY 2021-22 can be furnished in the FY-2022-23.
Taxpayer should be very careful while filing Form ITR-U, because an updated return of income can be furnished only once for the relevant assessment year.

 Payment of Additional tax

The assessee who furnished an updated return has to pay an additional tax of:-

  • 25% on the due tax and interest , if updated return is filed within 12 months, and
  • 50% on the due tax and interest, if updated return is filed after 12 months but before 24 months from the end of relevant assessment year.

Computation of Income Tax for Updated Return

As per section 140B of Income Tax Act, 1961 Income Tax liability for updated return will be calculated as follows:-

Tax Payable as per original ITRXXX
Add: InterestXXX
Add: Fees payable for non-filling of income TaxXXX
Add: Additional Tax Payable{139(8A)}XXX
Total Income Tax LiabilityXXX
Less: TDS/TCS/Advance Tax/Tax Relief etc.XXX
Net Tax Liability U/S 140BXXX

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