Income Tax Department notifies new ITR form: The Income Tax department has notified a new form for filing updated I-T returns in which taxpayers will have to give the exact reason for filing it along with the amount of income to be offered to tax. The new form (ITR-U) will be available to taxpayers for filing updated income tax returns for 2019-20 and 2020-21 fiscals.
Taxpayers filing ITR-U, which can be filed within 2 years of the end of the relevant assessment year, will have to give reasons for updating the income — return previously not filed or income not reported correctly or wrong heads of income chosen or reduction of carried forward loss.
The reasons given in the form also include reduction of unabsorbed depreciation or reduction of tax credit u/s 115JB/115JC or wrong rate of tax or any other reasons given by the taxpayers. The Budget 2022-23 has permitted taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a move aimed at helping correct any discrepancy or omissions.
A taxpayer would be permitted to file only one updated return per assessment year.
According to tax experts, the layout of the form has been kept very precise to help the assessee input the relevant information easily.
For those looking to file for FY2020-21, the additional amount will be 25 per cent of the due tax and interest.
An updated return is not allowed to be filed if it has the effect of showing a loss or reducing the total tax liability determined previously or resulting in a refund or increases the refund. The form requires suitable disclosures in this regard.
The form is expected to have regular updates with each passing year to make it more comprehensive for analysis and processing by the income tax department.
While the return can be verified only through a Digital Signature Certificate (DSC) in tax audit cases and filing of return by a political party, Electronic Verification Code (EVC) can be an alternative in non-tax audit cases. The option of verification by posting the acknowledgement to Bangalore has not been specified.
Currently, if the I-T Department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication, and the new proposal would repose trust in the taxpayer.
In her budget speech this year, Finance Minister Nirmala Sitharman had said that in order to provide an opportunity to correct such errors, she proposed a new provision permitting taxpayers to file an updated return on payment of additional tax.
“This updated return can be filed within two years from the end of the relevant assessment year,” she had said in February this year.
An additional 25 per cent on the due tax and interest would have to be paid if the updated ITR is filed within 12 months, while the rate will go up to 50 per cent if it is filed after 12 months, but before 24 months from the end of relevant Assessment Year.
However, if a prosecution proceeding is initiated by issuing notice for a particular Assessment Year, taxpayers cannot avail updated return benefits in that particular year. Also, if a taxpayer files an updated return and does not pay the additional taxes then the return would be tendered invalid.