All about Updated Income-tax return (ITR-U)

All about Updated Income-tax return (ITR-U).

ITR U also known as Updated ITR was introduced in Budget 2022. This was an opportunity given to tax filers to correct their old mistakes but only those corrections were allowed which caused a loss of revenue. In simple terms you can file ITR U only when you incur some tax liability after filing ITR U. If you have an unclaimed refund or any unreported losses, you can not file ITR U.

ITR U can be filed irrespective of whether you have filed your return or not.

ITR U is allowed to be filed in the following circumstances:

• Return not filed in Previous Years  2020-21, 2021-22 
• Under-reporting or non-reporting of Income.
• Income reported under the wrong head.
• More loss reported and carried forward in filed returns. 
• Lesser taxes have been paid.

ITR U is not allowed to be filed in the following circumstances:

• If ITR U to be filed is a nil return, (Total income below 2.50 Lacs)    
• If ITR U is to be filed will lower the tax liability as compared to the originally filed return,
• If ITR U to be filed is a return of loss,
• If ITR U is to be filed will result in an increase in refunds, 
• Where proceedings are started by the income tax authorities u/s 132A., 
• If the survey has been conducted u/s 133A, 
• If search/prosecution proceedings have been initiated, 
• If assessment/reassessment/revision/re-computation is either pending or completed for that relevant year, 

The time limit for which ITR U can be filed.

ITR U can be filed within 24 months from the end of the relevant Assessment Year. So till 31st March 2023, ITR U can be filed for FY 2020-21 (AY 2021-22), FY 2021-22 (AY 2022-23)

Penalty for filing ITR U

Budget 2022 has given two different penalties for filing ITR U and they are 25% and 50% of your additional tax liability.

• If ITR U is filed within 12 months from the end of the relevant Assessment year, the penalty payable will be 25% of additional tax liability.
• If ITR U is filed within 24 months from the end of the relevant Assessment year, the penalty payable will be 50% of additional tax liability.

Here additional tax liability means tax liability that arose due to filing of ITR U.

FAQs On ITR U

1. What’s extra in the ITR U form as compared to Normal ITR form?

In ITR U, there are two additional schedules, namely schedule “139(8A)” & “PartB-ATI”. In schedule 139(8A), you have to give details of your original filing and reason for the filing ITR U & In schedule PartB-ATI, your additional tax liability along with the fine will be calculated that arose due to filing of ITR U.

2. Can ITR U be filed with 0 tax liability?

ITR U is allowed to be filed when there is some amount payable in an updated ITR and that amount can be in the form of tax or a late filing fee. Let's look at the following table eligibility for ITR U with 0 tax.

3. Can we change ITR Form while filing ITR U?

Yes, you can change the form while filing ITR U. You can file any ITR form while filing ITR U irrespective of what you have filed while filing the original return.

4. Is ITR U needed to be re-verified?

Yes, ITR U is also required to be e-verified like the original return. Unlike the original return, ITR U do not have the option to e-verify later which means you have to e-*verify the return at the time of filing of return (ITR U)

5. What are the additional benefits of filing ITR U?

By filing an ITR U, you can declare income you missed to report while filing your original return. It will help you save from income tax notices and hefty penalties that income tax will charge when they will catch your undisclosed income. 

6. Can one claim by filing ITR U?

No, one can not claim a refund from filing ITR U. If filing ITR U results in a decrease in tax liability, an increase in a tax refund, or a claim of loss, filing ITR U is not allowed.

7. Can ITR U be revised/updated?

ITR U can be filed only once for a Financial Year. So you can not revise/update filed ITR U.