What is ITR – U?

Errors are a part and parcel of life. This is applicable even to your business and other filings. While computing the statement of income and total tax liability, it is very common and understandable to make errors. As a result of accepting this as a fact, the finance minister during the fixation of Budget 2022, stated that they were proposing to provide a chance to submit updated income tax returns, in case of errors. This speech led to amendment of the provisions of income tax act. The section 139 (8A) provides for filing ITR in an updated format through form ITR U. This blog focuses on exactly what ITR-U is, its applicability and other provisions related to it. 

ITR – U Form Meaning

ITR U means the form for filing updated income tax returns. This form is an addition to the seven different ITR related forms, which allows the taxpayer / assessee to update the information in case of any errors. This is the chance by the government to limit the legal consequences raised due to improper filing of income tax returns. 

The Central Board of Direct Taxes through a notification issued on 29th April 2022, provided for the applicability of an updated income tax return form. The form is in force from April 2022, and made applicable since the assessment year 2020-21. According to the rules and the section 139(8A), a tax payer can furnish the ITR U form for the past 24 months or 2 years of the relevant assessment year. 

Who can file ITR U? 

A taxpayer is eligible to file updated income tax return when:

• they fail to file ITR on or before the deadline;
• To file the belated returns; and 
• To rectify the errors in income tax returns.

Further, the following information related details can be rectified in the ITR U form: 

• Improper details of income earned;
• Choosing the wrong head of income;
• Applying the wrong tax rate;
• To reduce loss carrying forward of loss;
• Reduction of unabsorbed depreciation; and
• Lastly, to reduce tax credit. 

Also Read: How to file ITR online?

Who cannot file ITR U? 

Any taxpayer cannot file updated income tax return in the below mentioned conditions:

• Taxpayer who has already submitted ITR U for the assessment year;
• To file nil return;
• To file loss return;
• Enhance or claim income tax refunds;
• To decrease the tax liability;
• If search under section 132 is in process;
• In case of survey under section 133A; 
• When books of accounts are seized by the income tax department; and 
• Lastly, when assessment is pending. 

What is the ITR U format?

The updated income tax return form is divided into two parts.

Part A: general information

Here, the taxpayer needs to furnish their most basic information such as the Name, PAN, Aadhar, the form applicable, selection of the appropriate time limit, assessment year, etc. 

Part B: Additional Tax Information: computation of updated income and tax payable

In this section of the form, the assessee can compute the total tax liability that has arisen after the rectification of errors or omission made in the original returns. 

Here’s how you can compute the updated tax liability.

• Total Income Tax Liability = Payable Tax + Interest applicable + Late fees + Additional Tax

• Net Tax Liability = Total Income Tax Liability – Taxes paid (TDS/TCS/ Advance Tax/ Relief, etc). 

If the taxpayer is a company, ITR Form 6 is applicable. Read What is ITR 6 form? to know all about ITR Filing for companies.

What is the time limit to file the updated income tax return?

The ITR U can be submitted within 24 months or 2 years from the end of the relevant assessment year. 

For example,

For the Assessment Year 2023 – 24, you can file for the years 2022-23 and 2021-22.

What is the additional tax on ITR U?

When an assessee opts to file ITR U there is no penalty associated. However, they become liable to pay additional tax applicable on the following basis: 

• 25% + interest if you are filing ITR U within 12 months from the end of relevant AY; and 
• 500% + interest if you are filing ITR U within  24 months of the end of the relevant assessment year. 

Keynote: A taxpayer can only file an updated income tax return (ITR U) once in an assessment year. 

How to file ITR U? 

You can file an updated income tax return online by furnishing it electronically along with the originally applicable ITR form, from the ITR 1 to ITR 7. 

To complete the process, you need to fill the form as per the instructions and guidelines of the income tax department. Then submit it and the revised return in original form ITR 1 – ITR 7 on  the e filing portal, followed by verification. 

Conclusion

The ITR form 7 was introduced with the purpose of giving people who make genuine errors a chance to avoid legal proceedings due to such errors. However, using the form with an intent of evading tax liabilities is highly disregarded. The experts at LegalWiz.in are just a call away, we can help you rectify the errors by filing the form ITR U! Connect today!