Correct errors and omissions in ITR with updated return
Remember that an updated ITR can’t be used to declare lower income, claim losses, or request more refund
While the original deadline to file income-tax
return (ITR) was July 31, individuals can still file a belated, revised, or
updated return, based on their circumstances and timing.
If you have not yet filed an ITR for the
2022-23 financial years (FY23), you can file a belated return. If you have
already filed your ITR, but now realise that there was a mistake or you
misreported your income, you can file a revised return.
The finance Act, 2022, introduced the concept
of updated return (ITR-U) under section 139 (8A). “It is form that allows
individuals to update their ITRs and correct errors or omissions. Taxpayers
have a two year window from the end of the year in which they initially filed
their return to make amendments.”
An individual taxpayer who is eligible
to file an updated return can do so even if she has not filed an original or a
belated return.
Who can file
An updated return can be filled
if the return was not filed, income was inaccurately reported, the incorrect
tax rates were applied, to reduce carried-forward losses, or to correct the
wrong income category. “An updated return can be filled for original belated or
revised return. However, only one updated return is allowed per assessment
year.”
In FY24, a person can file an
updated return for assessment year 2021-22 and 2022-23.
Pros and cons
If taxpayer is liable to file an
ITR under Section 139, she can comply with this requirement by filling an
ITR-U, thereby protecting herself from penalties for misreporting or
underreporting income. “Filing ITR-U helps evade scrutiny assessment under
Section 143(3), best judgement assessment under section 144, and income
escaping assessment under Section 147.”Taxpayer can also protect themselves
from surveys, search and seizure proceedings by filling ITR-U.
As for the cons, “This return can’t
be filled to claim refunds, losses, or a refund in excess of what was claimed
in the original or belated ITR.
When to file updated revised or belated ITR
If you missed the July 31, 2023,
deadline for filing your ITR for FY23, you have the option to file a belated
return. “A belated return allows you to file your ITR after the deadline, but
there are new consequences. You may be liable to pay a penalty and interest or
any tax payable. Also, you can’t revise belated return once it’s filled.”
“If the taxpayer failed to
disclose certain incomes and pay the appropriate tax, they should file an
ITR-U.”
Note that the updated ITR can’t
be used to declare lower income, claim losses, or request income refunds. “When
there is an error, additional income has to be disclosed, or if there is any
mistake in the original or belated ITR, which may result in a refund also, a
taxpayer can file a revised return until December 31 of the relevant assessment
year.”
However, no refund can be claimed
with ITR-U.
HOW TO CALCULATE TAX LIABLITY FOR
UPDATED RETURN
Consider the income tax payable
Next, consider the interest and
free payable for non-filing
You will also have to pay an
additional tax
This will equal 25 percent of the
tax if the return is filled within 12 months of the end of the relevant
assessment year.
It will be 50 percent if the
return is filled within 12-24 months of the end of the relevant assessment
year.
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