The income tax service has notified a new form for filing updated computer declarations in which taxpayers must indicate the exact reason for filing as well as the amount of income to be offered to the tax.
The new form (ITR-U) will be made available to taxpayers for filing updated tax returns for fiscal years 2019-20 and 2020-21.
Taxpayers who file an ITR-U, which can be filed within two years of the end of the relevant tax year, will be required to provide reasons for updating the previously unfiled tax return or income not reported correctly or wrong revenue leaders selected or loss carry forward reduction. Reasons given in the form also include reduction of unabsorbed depreciation or reduction of tax credit u/s 115JB/115JC or wrong tax rate or any other reason given by taxpayers.
Budget 2022-2023 allowed taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a measure to help correct any discrepancies or omissions. A taxpayer would only be permitted to file one updated return per tax year.
Shailesh Kumar, partner at Nangia & Co LLP, said the layout of the form was very precise to help the assessee easily enter the relevant information. “Furthermore, it may be noted that only the amount of income to be offered for tax purposes needs to be specified under the prescribed income headings. No income breakdown or detailed information needs to be submitted, unlike the regular ITR forms and the exact reason for filing the updated return must be submitted in the form itself,” he said.
Tax and advisory firm AKM Global Partner-Tax Sandeep Sehgal said that taxpayers wishing to file the same request for the 2019-2020 fiscal year will have to pay the tax and interest due as well as an additional 50% of these. taxes and interest. For those wishing to file for the 2020-21 fiscal year, the additional amount will be 25% of the tax and interest due.
For those wishing to file for the 2020-21 fiscal year, the additional amount will be 25% of the tax and interest due.
“An updated return is not permitted to be filed if it has the effect of showing a loss or reducing the total tax liability previously determined or causing a refund or increasing the refund. The form requires appropriate information in this regard,” Sehgal said.
Kumar said the form should have regular updates with each passing year to make it more comprehensive for analysis and processing by the income tax department.
“While the declaration can only be verified by means of a digital signature certificate (DSC) in cases of tax audit and declaration filing by a political party, the electronic verification code (EVC) can be a alternative in non-tax audit cases. The option to audit by sending the acknowledgment to Bangalore has not been specified,” Kumar added.
Currently, if the IT department discovers that some income was missed by the assessee, it goes through a lengthy arbitration process, and the new proposal would rest with the taxpayer.
“To provide an opportunity to correct these errors, I am proposing a new provision allowing taxpayers to file an updated return on payment of additional tax. This updated return may be filed within two years of the end of the tax year concerned”, declared the Minister of Finance. Nirmala Sitharaman said in his 2022-23 budget speech.
An additional 25% on the tax and interest due should be paid if the updated ITR is filed within 12 months, while the rate will increase to 50% if filed after 12 months but before 24 months to count from the end. of the relevant valuation year.
However, if a lawsuit is initiated by issuing a notice for a particular assessment year, taxpayers cannot receive updated return benefits in that particular year. Also, if a taxpayer files an updated return and does not pay the additional taxes, the return would be declared invalid.