ITR-U – What is ITR-U & How to file Updated Return under section 139(8A)

Filing income tax returns (ITR) is an essential responsibility for every taxpayer. It helps individuals and entities fulfill their legal obligations and maintain transparency in their financial affairs. The Income Tax Department of India has introduced several provisions and forms to streamline the tax filing process, making it easier and more convenient for taxpayers. One such form is ITR-U, also known as the Updated Return, which allows individuals to correct any errors or omissions made while filing their original returns.

In this blog post, we will delve into the world of ITR-U, exploring what it is, when it is required, and how to file an updated return under Section 139(8A) of the Income Tax Act. Whether you have made mistakes in reporting your income, omitted certain deductions, or need to make changes to your tax details, understanding ITR-U will empower you to rectify any discrepancies and ensure compliance with the tax laws.

What is ITR-U?

ITR-U refers to the Updated Return form used for filing an amended or revised income tax return in India. It is a provision introduced by the Income Tax Department to enable taxpayers to correct any errors, rectify omissions, or make changes to their original tax return. The “U” in ITR-U stands for “Updated.”

ITR-U is primarily used when individuals or entities realize that they have made mistakes in reporting their income, claiming deductions, providing incorrect details, or omitting important information in their initial tax return. By filing an updated return using ITR-U, taxpayers can rectify these errors and ensure that their tax records reflect their financial situation accurately.

The filing of ITR-U falls under Section 139(8A) of the Income Tax Act, which allows taxpayers to revise their returns within a specific timeframe. It is important to note that ITR-U is different from the regular income tax return forms (such as ITR-1, ITR-2, etc.) used for filing the original tax return.

Filing ITR-U involves providing accurate details of the original return, specifying the changes or amendments being made, and submitting the revised return electronically through the Income Tax Department’s official website or other authorized platforms. It is crucial to ensure that the updated return is filed within the prescribed deadline to avoid penalties and legal consequences.

Who can file ITR-U?

• Return previously not filed

Taxpayers who have not previously filed a return can file an Updated Return to report their income and fulfill their tax obligations.

• Income not reported correctly

When income was not reported correctly, taxpayers can file an Updated Return to rectify the error and provide accurate income details.

• Incorrect heads of income chosen

If incorrect heads of income were chosen, taxpayers can use ITR-U to correct the classification and allocate income under the appropriate heads.

• Reduction of carried forward loss

Taxpayers can file an Updated Return to adjust and reduce a carried forward loss.

• Reduction of unabsorbed depreciation

When a reduction in unabsorbed depreciation is needed, taxpayers can file an Updated Return to adjust and reduce it.

• Reduction of tax credit under Sections 115JB/115JC

Taxpayers can file an Updated Return to reduce tax credit under Sections 115JB/115JC.

• Incorrect rate of tax

When an incorrect rate of tax has been applied, taxpayers can use ITR-U to correct the rate and ensure accurate calculation of their tax liability.

Who Cannot File Form ITR-U?

• Return of loss

If the updated return results in a return of loss, it is not permitted to be filed using Form ITR-U. The form is designed for rectifying errors or making changes to the original return; it is not intended for reporting a loss.

• Reduction of income tax liability

If filing an updated return reduces the income tax liability that was declared in the earlier filed return, Form ITR-U is not applicable. The purpose of the form is not to facilitate a revision of the tax liability to a lower amount.

• Increase in refund

If filing an updated return leads to an increase in the refund amount compared to the return filed earlier, Form ITR-U is not applicable. The form is not designed to increase the refund amount.

• Search or requisition

If a search has been initiated under section 132 or books of accounts or any other documents have been requisitioned under section 132A, filing Form ITR-U is not permitted.

• Survey conducted

If a survey has been conducted under section 133A, Form ITR-U is not applicable for filing an updated return.

• Pending or completed proceedings

If any assessment, reassessment, re-computation, or revision proceedings are pending or have been completed for the relevant assessment year, Form ITR-U is not permitted.

• Information under various acts

Suppose the Assessing Officer has information pertaining to the taxpayer under the Prevention of Money Laundering Act, the Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act, the Benami Property Transactions Act, or the Smugglers and Foreign Exchange Manipulators Act, and this information has been communicated to the assessee, Form ITR-U is ineligible.

• Information under agreements

If information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A, and this information has been communicated to the taxpayer before the date of furnishing the return, Form ITR-U is not permitted.

• Other notified persons

There may be specific categories of individuals or entities who are notified as ineligible to file Form ITR-U as per notifications issued by the tax authorities.

How to File Form ITR-U: Step-by-Step Guide

Part A – Providing Basic Details (ITR-U)

• Fill in your PAN, Aadhaar Number, and Assessment Year for which you are filing the updated return.
• Indicate whether you have previously filed a return for this assessment year under section 139(1) or any other section.
• If you have filed a return before, provide details such as the form filed, acknowledgement or Receipt Number, and the date of filing the original return.
• Check your eligibility to file an updated return, ensuring you do not fall into any ineligible categories.
• Select the appropriate ITR form for filing the updated return.
• State the reason for updating your income, such as returns previously not filed, income not reported correctly, incorrect heads of income chosen, and others.
• Specify if you are filing the updated return within 12 months from the end of the relevant assessment year or between 12 to 24 months from the end of the relevant assessment year.
• Indicate if you are filing the updated return to reduce carried forward loss, unabsorbed depreciation, or tax credit.

Part B – Calculating Updated Income and Tax Liability (ITR-U)

• Mention the head of income under which you are reporting the additional income in the updated return.
• Provide the total income as per the last valid return, only if you have filed a return previously.
• Calculate the total income as per Part B-TI of the updated return.
• Determine the amount payable or refundable based on the updated return.
• Consider any amount payable or refund claimed in the last valid return.
• Account for any fee for default in furnishing the return of income under section 234F.
• Include the regular assessment tax, if applicable.
• Calculate the aggregate liability on additional income.
• Determine the additional income-tax liability on the updated income based on prescribed rates.
• Calculate the net amount payable or refundable.
• Report any tax paid under section 140B.
• Determine the tax due by subtracting the tax paid from the net amount payable.
• Provide details of tax payments made under section 140B and payments of Advance Tax/Self-Assessment Tax/Regular Assessment Tax that were not claimed in the earlier return.
• Note that certain credits or reliefs may not be re-claimed under section 140B(2).

Conclusion

Filing an updated return using ITR-U is a crucial step in rectifying errors, updating income details, and ensuring accurate tax filings. It provides taxpayers with the opportunity to correct mistakes made in the original return and comply with tax laws effectively. By understanding the concept of ITR-U and following the guidelines provided, taxpayers can navigate the process smoothly and avoid penalties or legal consequences.