Navigating the labyrinthine world of income tax returns becomes more manageable with the advent of ITR-U. Introduced after the Union Budget 2022, ITR-U is a formidable tool empowering taxpayers to rectify errors or omissions for a generous two-year period beyond the end of the relevant assessment year. This comprehensive guide aims to demystify ITR-U, shedding light on its purpose, eligibility criteria, filing procedures, and deadlines.

1. What is ITR-U?

  • ITR-U, short for Income Tax Return form Update, serves as a mechanism for taxpayers to revise and rectify their returns by addressing errors or omissions for up to two years post the conclusion of the relevant assessment year.
  • Section 139(8A) under the Income Tax Act offers taxpayers a window of opportunity to update their ITRs within the specified timeframe, aiming to enhance tax compliance without triggering legal repercussions.

2. ITR-U Filing Deadline (AY 2021-22):

  • Taxpayers for the assessment year 2021-22 have until March 31, 2024, to leverage the benefits of ITR-U and file an updated return, specifically for omitted or inaccurately reported income.

3. Who Can File ITR-U?

  • ITR-U extends its benefits to a broad spectrum of taxpayers falling under Section 139 (8A). Eligibility encompasses those who have previously filed an original, revised, or belated return.
  • ITR-U caters to various scenarios, including:
    • Omission or Error Correction
    • First-time Filers
    • Income Reporting Correction
    • Heads of Income Correction
    • Loss and Depreciation Adjustment
    • Tax Credit Adjustment
    • Correcting Tax Rate

4. Additional Tax Calculation:

  • First Period (Within 12 Months): Taxpayers incur 25% of the further tax amount plus interest if they file their updated return within the initial 12-month period.
  • Second Period (Extended to 24 Months): The additional tax increases to 50% of the further tax amount plus interest if the updated return is submitted within the extended 24-month period.

5. How to File ITR-U Form:

Part-A: General Information

  • PAN, Aadhaar details, assessment year, and filing history.
  • Reason for updating the ITR.

Part-B: Updated Income Details and Liability Calculation

  • Mention the head of income under which additional income is reported.
  • Provide the total income as per the last valid return.
  • 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 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 not claimed in the earlier return.

Conclusion:

In conclusion, ITR-U emerges as a crucial tool in the arsenal of taxpayers, providing a strategic avenue to rectify, update, and enhance their income tax returns. It goes beyond being a mere form; it’s an opportunity to correct past errors and align tax filings accurately. By delving into the intricacies of the filing process outlined in Parts A and B, taxpayers can seamlessly navigate the landscape of ITR-U. Mastering ITR-U isn’t just a choice; it’s a prudent move toward precise, error-free tax filings and enhanced financial compliance.

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If you need any help in filing ITR U form or any other tax related work you can contact the Author at 8302480939.

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