The Government has introduced a new form ITR-U for taxpayers to file updated IT returns. Whether you missed a deduction or made an honest mistake, fear not, as ITR-U lets you rectify errors and omissions for up to two years from the end of the relevant assessment year. Filers of ITR-U must explain their circumstances and the amount of their income that should be subject to taxation. Taxpayers can currently use this form to submit amended IT returns for the 2019–20 and 2020–21 tax years.
What’s ITR-U and Who Has to File It?
Income Tax Updated Return (ITR-U) is a type of income tax return as per section 139(8A) of the Income Tax Act 1961. Taxpayers can do things like reduce their income tax credit, decrease their carry forward loss, and decrease their unabsorbed depreciation by filing an amended return. It provides a straightforward interface that walks users through the tax filing procedure. Using this service has made it much easier for taxpayers to meet the April 15th deadline without making a trip to the Income Tax Department in person.
Taxpayers have the freedom to file updated return using Form ITR-U, regardless of whether they have filed their original, revised, or delayed return of income - as per section 139(8A) of the Income Tax Act 1961. A valid basis for filing an amended return is required, such as the need to rectify incorrect information or claim previously unclaimed deductions. As a result, taxpayers must provide reasonable explanations for amending tax returns that have already been filed, for revising improper income reporting, for revising errors in selecting the heads of income, or for revising errors in decreasing carried forward losses.You can submit your ITR-U form within two years after the conclusion of the evaluation year.
Informing taxpayers about the convenience of using Form ITR-U could potentially increase their likelihood of filing their taxes in compliance with all relevant rules and regulations. Some of the benefits of using ITR -U are discussed below -
There are a number of disadvantages to filing a return under this clause. One major drawback is that this service is available only to those taxpayers with taxable incomes of up to Rs. 50 lakh, so those with higher incomes would have to file their tax returns manually.
The short window in which taxpayers can submit their returns is another drawback of ITR U. Failure to submit tax returns by the AY’s end can result in a fine of up to Rs. 10,000.
In addition, taxpayers who use this provision on their returns may miss out on tax benefits. For instance, they might not be able to write off their charitable contributions to some organizations.
Moreover, the lack of individualized feedback is a significant downside of ITR U. Step-by-step instructions for filing tax returns are provided, but the utility does not offer tailored guidance based on each client's specific tax status, which could lead to the consumer failing to take advantage of all available tax credits and deductions.
Cases When You Can’t Submit an Amended Tax Return
Introduced in the Union Budget 2022, updated returns are the new cool kids on the block, giving you the power to stay on top of your tax game. However, despite the fact that ITR U has made it easier for taxpayers to file their returns from the prior year, there are a few downsides to it that must be taken into account. Taxpayers should weigh the advantages and disadvantages of utilizing this method before deciding whether or not to include it in their tax filings. Whether or not taxpayers choose to use ITR U, it is still their responsibility to file their returns on time to avoid penalties and other legal consequences.