ITR-U : Benefits, process and additional income tax payable

Introduction

In India, the government has introduced the concept of updated returns in the Union Budget 2022 to benefit taxpayers who have failed to file their Income Tax Returns (ITRs) by the due date. ITR-U under Section 139(8A) is a facility provided by the government to such taxpayers.

The ITR-U return allows taxpayers to file their income tax returns along with any additional information that may have been missed or omitted during the financial year. This return can be used to amend an already filed return or to file a return for any financial year after the due date.

The process of filing the ITR-U return is the same as filing any other ITR. The taxpayer has to log in to the official website of the Income Tax Department and provide the required details. Once the details are verified, the taxpayer can file their ITR-U return.

The ITR-U return is a great facility provided by the government to benefit taxpayers who have failed to file their ITRs on time. This step taken by the government will help taxpayers to stay compliant with the tax laws and also help them to avoid any penalties or interest.

ITR U/ Updated Return As Per Income Tax Act & Rules?

Section 139 (8A), 140B and 153(1A) of income tax act was Ins. by the Act No. 06 of 2022, w.e.f. 1-4-2022 & rule 12AC of the Income-tax Rules, 1962 are relevant sections and rule for updated return.

A taxpayer may submit an updated return of their income or the income of another person for whom they are liable to pay tax under the Income Tax Act at any time within two years of the end of the assessment year. This right to submit an updated return does not apply if the updated return is a return of a loss, decreases the total tax liability determined by the original return, or results in a larger refund.

Person shall not be eligible to furnish an updated return- ITR U under this sub-section in any of the following cases:

(a) where a search has been initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A in the case of such person;

(b) where a survey has been conducted under section 133A, other than sub-section (2A) of that section, in the case of such person;

(c) where a notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belongs to such person;

(d) where a notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person,

for the assessment year relevant to the previous year in which such search is initiated or survey is conducted or requisition is made and any assessment year preceding such assessment year.

However, this is also not possible if

(a) an updated return has already been furnished,

(b) any assessment or reassessment or recomputation or revision of income proceedings are pending or have been completed,

(c) information in respect of the person has been received under the smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) or the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988) or the Prevention of Money-laundering Act, 2002 (15 of 2003) or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015) and the same has been communicated to him, prior to the date of furnishing of return,

(d) information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return,

(e) any prosecution proceedings under the Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of furnishing of return.

(f) he is such person or belongs to such class of persons, as may be notified by the Board in this regard

Additionally, a person who has sustained a loss and filed a return of loss within the prescribed time will be allowed to furnish an updated return of income.

Additional Income-Tax Payable In ITR U

The additional income-tax payable at the time of furnishing the return under sub-section (8A) of section 139 is 25% of the aggregate of tax and interest payable if the return is filed after the expiry of the time available under sub-section (4) or sub-section (5) of section 139 and before 12 months from the end of the relevant assessment year, or 50% of the aggregate of tax and interest payable if the return is filed after 12 months from the end of the relevant assessment year but before 24 months from the end of the relevant assessment year.

Benefits Of ITR U

Filing ITR-U helps to avoid the hassle of a scrutiny assessment under Section 143(3), best judgement assessment under Section 144 and income escaping assessment under Section 147. It also helps to avoid a survey, search and seizure proceedings.

If you have missed the due date for filing your income tax return for the Financial Year 2021-2022, which is 31st December 2022, you can still file your ITR through ITR U. However, no refund claim is possible through this option, and you cannot file a nil return or a loss return through ITR U.

Conclusion

The ITR-U return facility provided by the government is a great step taken to benefit taxpayers who have failed to file their ITRs by the due date. It allows them to amend an already filed return or to file a return for any financial year after the due date with some additional income tax. The process of filing the ITR-U return is the same as filing any other ITR. This facility is beneficial for taxpayers who want to stay compliant with the tax laws. The ITR-U return also helps taxpayers to avoid any scrutiny assessment, best judgement assessment and income escaping assessment. Even though the ITR-U return does not allow a refund claim or filing a nil or loss return, it is still a great facility provided by the government to benefit taxpayers.

The author can also be reached at fcsasharma@gmail.com

Disclaimer: The purpose of this article is to provide informational material only. It is not intended to form a contractual agreement of any kind or serve as a substitute for professional advice. FCS Amit Kumar Sharma has taken all necessary precautions to ensure the accuracy of the information provided herein at the time of publication. We will not be liable for any direct, indirect or consequential damages that may arise as a result of the use of this article or the information contained therein.