The modified ITR (ITR-U) for the AY 2021–22, or financial year 2021, must be filed by taxpayers by March 31, 2024. The I-T Act's Section 139(8A) defines ITR-U. After the relevant evaluation year ends, it can be filed within two years. In the Union Budget 2022, the government proposed the idea of updated returns.
Who is the ITR-U filer?
The window for submitting an ITR-U is closed. Within 24 months of the end of the relevant assessment year, taxpayers who either filed their ITR (on time, late, or even a revised return) or did not file their ITR for that assessment year can file their return document together with an updated return. Note that you cannot file an ITR-U to get your taxes paid back.
Thus, until March 31, taxpayers who have not yet filed their FY2020–21 taxes or who wish to update them with new income can do so.
When can an ITR-U be filed?
It can be filed under situations where, Original return went missing, some deadlines for belated and revised returns were missed, to correct undeclared income, when the taxpayer chose the wrong head of income, and to rectify taxes paid at incorrect rates.
Extra Charge
There won't be any additional fees or penalties for taxpayers to fill out Form ITR-U. However, in accordance with Income Tax Act Section 140B, they will be required to pay an additional tax.
There is an additional 25% tax on the tax dues if the ITR-U is filed within 12 months after the conclusion of the relevant assessment year. Should you file within a 24-month period, the extra tax rises to 50%.
Superior to departmental scrunity in IT
Taxpayers can fix their mistakes more easily when they file their ITR-U on time, that is, before 24 months. In the end, this would assist them in lowering their tax obligations and fines. Additionally, it would spare them from future audits, inspections, and notices from the IT department. A fine of up to Rs 10,000 may be incurred for failing to file tax returns by the end of the relevant AY.
Additionally, it's a chance for people to disclose any income that may have slipped between the cracks. To put it briefly, it helps prevent further legal tax notices and arguments, according to Business Standard interviewee Alay Razvi, partner at Accord Juris LLP.
Submitting an updated ITR
Taxpayers must use the ITR forms notified for the relevant assessment year in addition to the recently added form ITR-U in order to complete an updated return.
It should be noted that the total income tax liability, including tax payable, interest, late filing penalties, and additional tax, is included in the tax payable for an updated return. Subtracting TDS, TCS, advance tax, and tax relief from the total income tax liability yields the net tax liability.
