Update Return ITR-U news: Failed to report certain income in ITR? Here’s what you should do now  | The Financial Express

Failed to report certain income in ITR? Here’s what you should do 

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Failed to report certain income in ITR? Here’s what you should do 
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If you have failed to report certain income in your Income Tax Return (ITR) for Financial Year 2021-22 (AY 2022-23), you can report it in the next two years by filing an updated return. The updated return (ITR-U) facility became effective from the start of the current financial year (1 April 2022). It was introduced by Finance Act 2022. For this purpose, the Act has added a new sub-section 8(A) to Section 139 of the Income Tax Act.

Here are the key points you should know about this facility introduced by the Government recently.

  • With the help of Updated Return, taxpayers can correct errors or omissions in their previous ITR after the previous of revised ITR is over.
  • Time period: You can use the ITR-U facility to disclose unreported income for up to two years from the assessment date.
  • Penalty: There are certain penalties for ITR-U. If filed within 12 months from the assessment date, there is a 25% penalty. As much as 50% penalty applies if ITR is filed within 24 months.
  • Last date of ITR-U for FY 2021-22: The last date for filing Updated Return for FY 2021-22 is March 31, 2025.
  • ITR-U Form: The Income Tax Department has issued a separate form, ITR-U, for filing an Updated Return.

Also Read: 10 things you should know about Updated Return

When you can’t use ITR-U

Taxpayers should know that they cannot use the updated return facility to reduce their previous tax liability. You can use this facility only to disclose an additional income that you may have missed or omitted while filing the return earlier. You will have to pay additional tax along with a penalty for the income that you missed to report earlier.

Also, you can’t use the updated return facility if the tax department has started a proceeding of assessment search or survey against you.

Updated Return vs Revised Return

There is a difference between updated and revised ITR. You can file an updated return only to disclose an extra income that you may have missed reporting earlier. Updated ITR cannot be used to reduce your tax liability from previous years.

In contrast, you can use the revised return facility to make corrections in the ITR. However, it can be filed only if you have filed the original return on time. The time allowed for the filing of revised returns is up to 9 months from the end of the financial year. For FY 21-22, the last date to file a revised return would be 31 December 2022.

After the revised return period is over, you can file the Updated Return only.

A revised return is also different from a belated return, which can be filed along with a fee by taxpayers who failed to file their returns on time.

Also Read: What is ITR-U? Here’s all you need to know

Most important point

You can file an updated return only once.

Why you should file updated return

If you have missed reporting certain income in previous ITR, you can do that with the help of ITR-U to avoid legal hassles and prosecution. You may take the help of a tax advisor to file updated return correctly.

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