ITR Update 2024 – Steps to File ITR-U in Section139(8A)

The IT department now has access to all information pertaining to capital gains/losses, dividend income, and NBFC fixed deposits. Any attempt at tax evasion will have serious consequences.

In ITR Update, the Income Tax Department used to get information only related to income from salary, interest on bank fixed deposits (FD), and taxes paid from the respective sources. This information was also shown on ITR Form 26AS. The IT department will now get all the information directly from your brokerage house, AMC, and post office. So, it will be difficult for taxpayers to hide such income and investments. In this article, we will provide you with a comprehensive overview of the latest ITR update 2024. We will cover everything from new forms to changes in the tax laws and regulations, and provide tips and tricks for filing your ITR effectively. Let’s dive in!

What is ITR Update?

ITR Update refers to the Income Tax Return form for individuals who are not required to get their accounts audited. 

In India, individuals must file their income tax returns annually if their income exceeds the maximum limit exempt from tax. ITR Update (ITR-1) is a simplified form that can be used by individuals with a salary income, one house property (excluding cases where loss is brought forward from previous years), and other income, such as interest income. A taxpayer with more complex tax affairs may need to use a different ITR form.

Who Can File ITR?

ITR Update (ITR-1) is designed for individuals who have a simple tax profile and meet the following criteria:

1. Individuals who are residents of India
2. Individuals having a total income of up to 50 lakh rupees in the financial year.
3. Individuals whose income is only from salary/pension, one house property (excluding cases where loss is brought forward from previous years), and other income such as interest income.
4. Individuals with no income from business or profession and do not hold any foreign assets.

If a taxpayer does not meet these criteria, they may need to file a different ITR form that suits their tax situation. For example, individuals earning income from a business or profession or who have foreign assets must use ITR-4 or ITR-3, respectively.

What is ITR-U?

ITR-U refers to the Income Tax Return Utility form. It is a specific form introduced under the provisions of Section 139(8A) of the Income Tax Act. The purpose of ITR-U is to provide taxpayers with an opportunity to update or correct their Income Tax Returns (ITR) within a two-year period. The two-year duration is calculated from the end of the year in which the original return was filed.

The introduction of ITR-U aims to enhance tax compliance among taxpayers by allowing them to rectify any errors or omissions in their previously filed ITRs. By utilizing ITR-U, taxpayers can make necessary amendments to ensure accurate reporting of their income and avoid potential legal consequences.

Please note that this information is based on the provisions of the Income Tax Act up until September 2021, and it is always advisable to consult the latest tax regulations and guidelines for the most accurate and up-to-date information.’

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ITR Update: Who can File ITR-U?

‘Provide information about the eligibility and scenarios for filing an updated return:

Individuals who have made errors or omitted income details in the following types of returns are eligible to file an updated return:

1. Original return of income
2. Belated return
3. Revised return

An updated return can be filed in the following cases:

1. Failure to file the return: If the taxpayer missed the deadline for filing the original return and the subsequent belated return deadline.
2. Incorrect income declaration: If the income was not declared accurately in the original return.
3. Selection of wrong head of income: If the taxpayer mistakenly chose the wrong category or head of income in the original return.
4. Incorrect tax rate: If the tax was paid at an incorrect rate in the original return.
5. Reduction of carried forward loss: If the taxpayer wants to reduce the amount of carried forward loss in the subsequent return.
6. Reduction of unabsorbed depreciation: If the taxpayer wishes to decrease the unabsorbed depreciation in the subsequent return.
7. Reduction of tax credit under Section 115JB/115JC: If the taxpayer wants to reduce the tax credit under Section 115JB or 115JC in the subsequent return.

Who is Not Eligible to File ITR-U?

ITR Update – ITR-U cannot be filed in the following circumstances:

1. Updated return already filed: If an updated return has already been filed for a particular assessment year (AY), filing another ITR-U is not permissible.
2. Nil return/loss return: ITR-U cannot be used for filing a nil return or a return that declares only losses.
3. Claiming/enhancing refund amount: If the purpose of filing an updated return is to claim or increase the refund amount, ITR-U cannot be utilized.
4. Lower tax liability: If filing an updated return results in a lower tax liability, it is not possible to file ITR-U.
5. Search proceedings under Section 132: If search proceedings have been initiated against the taxpayer under Section 132 of the Income Tax Act, filing ITR-U is not allowed.
6. Survey conducted under Section 133A: If a survey has been conducted under Section 133A of the Income Tax Act, ITR-U cannot be filed.
7. Seizure or requisition of books, documents, or assets: If the Income Tax authorities have seized or called for books, documents, or assets under Section 132A, filing ITR-U is not permitted.
8. Pending or completed assessment/reassessment/revision/re-computation: If any of these processes are pending or have already been completed, ITR-U cannot be filed.
9. No additional tax liability: If the tax liability has been adjusted with Tax Deducted at Source (TDS) credits or losses, and there is no additional tax liability, filing an Updated ITR using ITR-U is not possible.

What Is the Time Limit to File ITR-U?

‘Provide information on the time limit for filing ITR-U:

The time limit for filing ITR-U is 24 months from the end of the relevant assessment year. Starting from 1st April 2022, ITR-U became applicable. Therefore, during the current financial year 2022-23, you can file ITR-U for the assessment years 2020-21 and 2021-22.

For example, if you need to update the return for the financial year 2019-20, you have until 31st March 2023 to file the updated ITR-U.

How to File Form ITR-U?

A taxpayer can correct errors or omissions by filing an updated return. This can be done in case of any inaccuracies or discrepancies in their original, overdue, or revised returns.

An updated return can be filed in the following cases:

1. If the taxpayer has not filed their original Return or if they have missed the deadline for filing a belated return
2. If the taxpayer has not declared their income correctly
3. If the taxpayer has chosen the wrong head of income
4. If the taxpayer has paid tax at the wrong rate
5. To reduce the carried forward loss
6. To reduce the unabsorbed depreciation
7. To reduce the tax credit under section 115JB/115JC.

It is important to note that taxpayers can only file one updated Return for each assessment year. A taxpayer can only make corrections once for each financial year.

Steps to File ITR-U

Here are the steps to file an ITR-U:

1. Log on to the e-filing portal of the Income Tax Department (https://www.incometaxindiaefiling.gov.in/)
2. Register yourself on the portal, if you haven’t already, by providing your PAN and personal details.
3. Click on the “e-File” tab and select the appropriate Assessment Year for which you wish to file an Updated Return.
4. Select the “ITR-U” Form under the “Updated Return” section.
5. Fill in the required details in Part A of the ITR-U form, including your PAN, Aadhaar number, and assessment year.
6. Provide information on whether you have previously filed a return for the same assessment year, and if yes, specify the Form filed, acknowledgement number or receipt number, and date of filing.
7. Confirm your eligibility to file an Updated Return as per the conditions laid out in section 139(8A) of the Income Tax Act.
8. Choose the appropriate ITR form for updating your income and specify whether you are filing the Updated Return within 12 months or between 12 to 24 months from the end of the relevant assessment year.
9. If you are filing the updated Return to reduce carried forward loss, unabsorbed depreciation, or tax credit, indicate so in the Form.
10. Fill in the rest of the details in the ITR form as per the details available in the e-filing utility.
11. Verify the information provided and submit the Form.
12. Pay any tax due and interest, if any, along with the additional amount of 25% or 50% of such tax and interest, as the case may be.
13. Generate and download the acknowledgement of the updated Return.

Note: It is advisable to keep all necessary documents and information handy while filing the updated Return to avoid any errors or omissions.

How to Verify ITR-U?

‘Explain the methods of verification for non-tax audit and tax audit cases:

1. Non-tax audit cases: In non-tax audit cases, the method of verification is through a Digital Signature Certificate (DSC). Taxpayers are required to digitally sign their income tax returns using a valid DSC. This provides authentication and ensures the integrity of the filed return.
2. Tax audit cases: In tax audit cases, the method of verification is through an Electronic Verification Code (EVC). Taxpayers need to generate an EVC, which serves as a unique code for verifying the authenticity of their income tax returns. The EVC can be obtained through various methods such as net banking, bank account-based validation, Aadhaar OTP, or by using the E-filing OTP sent to the registered mobile number and email address.

How to Compute the Tax Payable for an Updated Return?

Sr. No.	Particulars	Match figure from	Amount (in Rs)
A.	Tax payable on additional income as per modified ITR (as per Part B-TTI of modified ITR)	Modified ITR (submitted along with ITR-U)	XXXX
B.	Interest levied, if any, on additional income under Section 234A/234B/234C (as per Part B-TTI of modified ITR)	Modified ITR (submitted along with ITR-U)	XXXX
C.	Late fee, if any, under Section 234F (as per Part B-TTI of modified ITR)	Modified ITR (submitted along with ITR-U)	XXXX
D.	Taxes paid or relief TDS/TCS/Advance Tax/regular assessment tax/Relief		XXXX
E.	Total refund issued (including interest)/claimed as per the original return.	Original return filed	XXXX
F.	Aggregate tax liability on additional income	A+B+C+E-D	XXXX
G.	Additional tax 25% or 50% on (F-C)		XXXX
H.	Net Amount Payable	F+G	XXXX

Is There Any Requirement to Pay Any Additional Tax?

It is possible that there may be a requirement to pay additional tax, depending on various factors such as your income, deductions, and applicable tax rates. The determination of additional tax liability is based on the specific details of your financial situation and the applicable tax laws in your jurisdiction. To accurately assess whether there is a requirement to pay additional tax, it is advisable to consult a tax professional or refer to the latest guidelines and provisions of the tax authority in your country.

ITR Update

ITR, or Income Tax Return, is a yearly declaration that Indian taxpayers are required to file with the government, disclosing their financial income earned during the previous financial year. In 2023, the Indian government has updated the ITR process with some new changes. Some of the major updates include the introduction of a new ITR form, pre-filled ITR forms, and a stricter penalty regime for non-compliance. Additionally, the government has increased the scope of tax reporting, requiring individuals to disclose more information about their financial investments and foreign assets. These updates aim to increase transparency in tax reporting and improve tax compliance in the country.

As the year 2023 approaches, taxpayers across the globe are gearing up for the latest income tax return (ITR) updates. The ITR is a document that taxpayers file with their respective governments to report their income and tax liability for a given year. Keeping up with the latest ITR updates is crucial for individuals and businesses to ensure they are compliant with the tax laws and regulations.

1. Introduction to ITR Update

The ITR Update 2023 is expected to bring significant changes in the way taxpayers file their returns. The government is likely to introduce new forms, enhance the digital infrastructure, and increase the compliance requirements for taxpayers. The ITR Update 2023 aims to simplify the tax filing process and promote greater transparency and accountability in the tax system.

2. New Forms for ITR Update

One of the significant changes in the ITR Update 2023 is the introduction of new forms. The government is likely to streamline the existing forms and make them more user-friendly. Taxpayers can expect to see a simplified version of the ITR-1 form, which is for individuals having income up to INR 50 lakhs. Additionally, the government is expected to introduce new forms for businesses and professionals.

3. Changes in Tax Laws and Regulations

The ITR Update 2023 is expected to bring significant changes in the tax laws and regulations. The government is likely to introduce new provisions to curb tax evasion and increase compliance requirements. It is expected to tighten the tax laws for high-net-worth individuals and businesses. The government is also likely to introduce measures to promote the use of digital modes of payment and curb the use of cash in transactions.

4. Tips and Tricks for Filing Your ITR

Filing your ITR can be a daunting task, but with the right preparation, it can be an easy process. Here are some tips and tricks for filing your ITR:

a. Start Early: It is advisable to start early and gather all the necessary documents required for filing your ITR. This will help you avoid any last-minute rush and ensure you have enough time to file your returns.

b. Check Your Form: Ensure that you are filing the correct form as per your income and tax liability. If you are unsure, seek the help of a tax professional.

c. Declare all Income: Ensure that you declare all your income from various sources, including rental income, capital gains, and interest income.

d. Claim Deductions: Claim all the deductions that you are eligible for under various sections of the Income Tax Act. This will help you reduce your tax liability and increase your tax savings.

e. Verify your ITR: It is essential to verify your ITR after filing it. You can verify your ITR online using your Aadhaar card or by sending a physical copy of the ITR-V to the Central Processing Centre.

ITR Update Changes in the Union Budget 2021-22

In the 2021 budget announcement, finance minister Nirmala Sitharaman said that ITR update will henceforth come pre-filled with information such as capital gains from listed shares, dividend income, interest from banks, post offices, etc. to simplify the process of ITR filing.

Further, to implement the proposals, on March 12, 2021, the CBDT released a notification stating that a specified category of persons is required to furnish their SFTs (statements of financial transactions) under Section 285BA of the Income Tax Act, 1961. It should also include information related to capital gains on the sale of listed shares or mutual funds, dividend income, and interest.

The category of persons defined as per the release includes recognized stock exchanges such as BSE, NSE, depositories, clearing corporations, registrars, share transfer agents, companies distributing dividends, banking companies, or cooperative banks covered under the banking laws, the Postmaster General as defined under the Indian Post Office Act, 1898, and NBFCs.

So, from 1 April 2021, the AIS, or Annual Information Statement, will carry extensive data. Taxpayers will be required to show all the details of income from sources such as salary, interest, dividends, capital gains from mutual funds, and shares in the ITR.

Compulsory Disclosure of Transactions in ITR Update

From April 1, 2021, if you are a salaried employee who has been trading in shares regularly or has a substantial income from dividends, then you can no longer hide this information from the tax department. Until now, many taxpayers have been hiding such transactions for reasons such as avoiding the trouble of calculating capital gains and losses, fear of filing complicated ITR update, reducing their tax liability, or simply reducing their outgoing taxes.

From the new financial year 2021–2022, the tax department will get all the information about your share trading, mutual fund transactions, post office deposits, dividend income, and deposits with the NBFC.

Any delay or non-reporting of this income by the taxpayer may result in severe penalties.

Conclusion

The process of filing tax returns has changed tremendously over the years. Even a minor error may invite a notice from the IT department for explanation or correction. Those who consult a tax expert are less likely to get a notice because the compliance requirement is being managed by a professional. So if you want to make this process simpler, ITR update you can reach out to the experts at Vakilsearch.

FAQs

Is there any penalty for ITR-U?

Yes, there is a penalty for filing an ITR-U. If an updated return is filed within 12 months from the end of the relevant Assessment Year, an additional 25 per cent of the tax due must be paid. If the updated Return is filed after 12 months, but before 24 months from the end of the relevant Assessment Year, the rate will go up to 50 percent.

What is Form ITR-U?

Form ITR-U is an updated return that allows you to make modifications to any of your previous returns within 24 months of filing. Its purpose is to enhance tax compliance among taxpayers and minimize legal actions.

Can a refund be claimed in ITR-U?

Yes, a refund can be claimed in an ITR-U if the updated Return results in an increase in the reimbursement.

What are the benefits of filing Form ITR-U?

Filing an ITR-U helps taxpayers to correct errors or omissions made in their original Return of income or revised Return. This ensures that their tax records are accurate and up-to-date, reducing the likelihood of facing penalties or prosecution for tax evasion.

Can I file ITR-U if I do not have any tax payable?

No, ITR-U can only be filed if there is a tax liability. If there is no tax payable, there is no need to file an updated return.

Is there any penalty for filing ITR-U?

No, there is no penalty for filing ITR-U. However, an additional tax under section 140B may be applicable. The additional tax amount is either 25% or 50% of the tax and interest due, depending on whether ITR-U is filed within 12 or 24 months from the end of the relevant assessment year.

Can a nil return be filed using ITR-U?

No, it is not possible to file a nil return using ITR-U. ITR-U is specifically designed for cases where there is an additional tax liability.

What are the benefits of filing Form ITR-U?

Filing ITR-U helps you avoid scrutiny assessments under section 143(3), best judgment assessments under section 144, and income escaping assessments under section 147. It also helps you steer clear of survey, search, and seizure proceedings.

Can I file ITR-U if I missed the original due date for filing my ITR?

Yes, you can still file ITR-U even if you missed the original deadline for filing your ITR. However, you will need to pay the applicable late filing fee under section 234F and any additional tax liability of 25% or 50% on the tax payable.

Can I claim a refund using ITR-U?

No, you cannot file ITR-U for claiming a refund, increasing the refund amount, filing a nil return, or filing a loss return. Therefore, you cannot claim a refund using ITR-U.

Can I utilize my remaining Tax Payment Challans to offset the tax dues under ITR-U?

No, any pending Advance Tax challan or Self-Assessment Tax challan should be reported under section 140B(2), and the credit will not be provided.

Can I claim additional carryforward loss using ITR-U?

No, as per section 139(8A), you cannot enhance your carryforward loss. You can only reduce the remaining balance of carryforward loss.

Can I file ITR-U if I have no tax payable?

No, if your total tax liability is adjusted with TDS credit and you do not have any additional tax liability, you cannot file an Updated ITR.

Can I file ITR-U if my total income is below 5 lakhs and I have claimed a rebate under section 87A?

Yes, you can file the updated return, but you will be liable for late filing fees. You must pay the fees and update the payment details under the 'Taxes Paid under 140B' section.

Can I change the ITR form number when filing ITR-U or an updated return?

Yes, if you initially filed ITR-1 for an assessment year and later realize the need to declare an additional source of income, you can switch to ITR 2/3/4 for the updated return.

Helpful Links

• What Happens if I File My Taxes Late and I Am Due a Refund?
• Section 119 of It Returns
• How to Pay Taxes as per New Income Tax Slab?