Updated Tax Return is now called ITR-U

The Budget for the FY 2022-23 had allowed certain taxpayers to file updated tax returns, within 2 years of filing the original returns after paying taxes due. A taxpayer can file only one tax return per assessment year as an updated tax return.

The income tax department has notified a new form called ITR-U that will be available to taxpayers to file updated tax returns for the financial years 2019-20 and 2020-21. Following are the key highlights of the ITR-U

• After giving reasons taxpayers can use ITR-U within 2 years from the end of the relevant assessment year. In addition, the applicable ITR forms 1 to 7 also need to be used.
• For the financial year 2019-20, the taxpayer will need to pay the due tax and interest along with an additional 50 percent amount of such tax and interest.

• For the financial year 2020-21, the taxpayer will need to pay the due tax and interest along with an additional 25 percent amount of such tax and interest.
• ITR-U cannot be filed if there is a reduction in the tax liability or if it results in an increase in the refund, loss, or any other claim.

The reasons mentioned in ITR-U for filing updated returns are

➺ Return previously not filed

➺ Income not reported correctly

➺ Wrong heads of income chosen

➺ Reduction of carried forward loss

➺ Reduction of unabsorbed depreciation

➺ Reduction of tax credit

➺ Wrong rate of tax

➺ Others