Eligible taxpayers need to file their updated income tax return (ITR-U) for AY 2021-22 (FY 2020-21) by March 31, 2024, as this is the last date to do so. ITR-U can be used to fix errors like under-reporting or misreporting of income, or other errors in the previously filed ITR. Moreover, ITR-U can also be filed by an individual who was required to file ITR as per tax rules but did not do so by the due date. If an individual does not fix the errors and the tax department catches them, penalties of up to 200% of the tax payable can be levied

“If an individual conceals income and does not report it then effective from assessment year (A.Y.) 2017-18, a new section 270A has been introduced, stipulating a penalty of either 50% or 200% of the tax payable. However, until assessment year 2016-17, as per Section 271 of the Income Tax Act, 1961, the maximum penalty would be up to 300% of the tax payable,” says S Ravi, Founder, Ravi Rajan & Co, a Delhi-based CA firm

Also read: Now VIP/PMO can help you expedite income tax appeal.

ITR-U

Source: Income-tax Department on X.

It must be noted that a taxpayer cannot file ITR-U if it leads to a lower tax liability after filing it. “If a taxpayer intends to file ITR-U which results in a refund or increases the refund previously due on the basis of an earlier income tax return, then also it cannot be done,” says Dr Suresh Surana, founder, RSM India, a tax and business consulting group.

Also read: After being imposed income tax on Rs 1.48 cr payout from surrendered pension policy, NRI filed appeal in ITAT and wins.

What is the deadline to file an updated income tax return (ITR-U)?

ITR-U can be filed any time within 24 months from the end of the relevant assessment year. “In the financial year 2023-24, a person can file an updated return for AY 2021-22 and AY 2022-23. The deadline for submitting an updated income tax return for the Financial Year 2020-21 (AY 2021-22) is approaching on March 31, 2024,” says Surana.Also read: Income Tax dept is calculating your advance tax liability by tracking these financial transactions.

Additional tax needs to be paid while filing ITR-U

ITR-U cannot be filed without payment of additional tax, depending upon the specific circumstances.

“The additional tax shall be equal to 50% of the aggregate of tax and interest payable by a person on the filing of the updated return. However, in case the updated return (ITR-U) is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year, the additional tax payable shall be 25% of the aggregate of tax and interest payable,” says Surana.

Surana explains that for computation of additional income tax, the tax amount payable shall include surcharge and cess. “Also, the Interest amount payable shall be reduced by the amount of interest paid (if any) in accordance with the earlier income tax return (ITR),” says Surana.

Cases when updated income tax return (ITR-U) cannot be filed

According to Surana, given below are some of the cases where ITR-U cannot be filed:

  • ITR-U cannot be filed if it results in refund or increases the refund previously due based on an earlier income tax return (ITR),
  • In case a search under section 132 has already been initiated against the taxpayer, ITR-U cannot be filed for the assessment year in which the search has been initiated and for any assessment year preceding such assessment year,
  • In case documents, or any assets, etc have been requisitioned under section 132A, ITR-U cannot be filed for such assessment year in which the requisition is made and for any assessment year preceding such assessment year,
  • In case a survey under section 133A has been conducted against the taxpayer, ITR-U cannot be filed for such assessment year in which the requisition is made and for any assessment year preceding such assessment year. However, this restriction shall be applicable in case the survey is conducted in connection to TDS or TCS,
  • In case a seizure or requisition of money, bullions, jewellery, or other documents has been made under section 132 or 132A and the seized or requisitioned items belong to the taxpayer, ITR-U cannot be filed for the assessment year in which such a seizure or requisition is made and also for any previous assessment year preceding such assessment year,
  • In case the assessment/reassessment/revision/re-computation is pending or already completed,
  • ITR-U cannot be filed in case the assessing officer has information about the taxpayer under specified Acts (i.e. Prevention of Money Laundering Act, Prohibition of Benami Property Transactions Act, etc) and the same has been communicated to the taxpayer before the furnishing of IITR-U,
  • ITR-U cannot be filed if the assessing officer has information about the taxpayer under Double Taxation Avoidance Agreement or Tax Information Exchange Agreement and the same has been communicated to the taxpayer.

Chartered accountants say that if an individual has concealed or not reported his/her income in their income tax return then it is better to file an ITR-U rather than pinning your hopes on the Income-Tax Department not finding out about it.

“In the current scenario, the Income Tax Department possesses various avenues for obtaining information regarding an individual’s income, such as Form 26AS, AIS/TIS, foreign sources, etc. The Department can procure income-related records from such sources and issue notices for undisclosed income. Therefore, it is strongly advised to proactively file the return on a self-basis rather than awaiting Departmental action,” says S. Ravi.



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