Missed the December 31st deadline? You can update ITR

ITR U can be filed only if a taxpayer has additional income to declare, irrespective of whether they have filed the original ITR or not. “If one wants to claim TDS refund by filing ITR U, it cannot be done as it cannot be used for filing nil tax return. Loss returns may also not be filed as reporting the loss set-off may reduce the tax expense. “One can only pay additional tax in the updated return,” said Sujit Bangar, founder of TaxBuddy.

This is what differentiates an amended and an updated return. “A revised return lets you correct errors in the original ITR, which can reduce your net taxable income and final tax liability. But an updated return is filed only if additional tax has to be paid,” said Jigar Mansatta, a chartered accountant based in Jamnagar.

Income reported in ITR u attracts higher tax and penalty. ITR u filed within 12 months, attracts 25% tax and that filed within 24 months is taxed at 50% on the sum of additional tax and interest earned thereon. This is over and above the tax levied as per the regular tax slab.

To explain with an example, suppose, you have declared taxable income of 6 lakh in original ITR and paid tax accordingly 32,500 on that. you missed reporting 1 lakh income originally, so you file ITR U to update the total taxable income 7 lakhs. your tax liability will be eliminated 20,000 (as per tax slab) + 25% of 52,500 ( 32,500+ 20,000) + 1% monthly interest earned on excess 20,000 tax with effect from August 2022.

verification deadline

As per a new rule introduced by the Central Board of Direct Taxes (CBDT), ITRs filed after July 31 need to be revised within 30 days (from the last 120 days) of return filing.

This means if you have filed revised or belated ITR in December at the last minute, you will have to verify it in January before the due date. Failure to verify the ITR within 30 days will lead to it being invalid.