In the past, the Income Tax Department primarily received information related to income from sources like salary, interest on bank fixed deposits (FD), and taxes paid from the respective sources. This data was typically reflected in the ITR Form 26AS. However, in the latest ITR update for 2024, the tax department will now directly access a broader range of financial data, including information from your brokerage house, Asset Management Company (AMC), and even post offices. This expansion will make it more challenging for taxpayers to hide income or investments, as the tax authorities will have direct access to a more comprehensive set of financial records.
In this article, we will take you through all the important updates for ITR filing in 2024. From new forms to changes in tax laws and regulations, we’ve got everything covered. Additionally, we’ll share useful tips and tricks to help you file your ITR effectively and avoid common mistakes. Let’s dive in!
What is ITR Update?
ITR Update refers to the Income Tax Return form (ITR-1) designed for individuals who are not required to get their accounts audited.
In India, individuals are mandated to file their income tax returns annually if their income exceeds the tax-exempt threshold. The ITR Update (ITR-1) is a simplified form specifically for individuals who have income from salary, a single house property (excluding cases where there is a carry-forward loss), and other sources of income like interest. Taxpayers with more complex financial situations, such as business income or multiple properties, may need to use other, more detailed ITR forms.
Who Can File ITR?
ITR Update (ITR-1) is intended for individuals with a simple tax profile who meet the following criteria:
Residency: Individuals who are residents of India.
Income Limit: Those whose total income does not exceed ₹50 lakh in the financial year.
Income Sources: Individuals whose income is exclusively from salary/pension, one house property (excluding cases where there is a loss carried forward from previous years), and other income such as interest income.
Exclusion: Individuals who do not have income from business or profession and do not own any foreign assets.
If a taxpayer’s profile does not match these criteria, they will need to file a different ITR form that corresponds to their tax situation. For example, individuals with income from business or profession must use ITR-4, while those with foreign assets will need to file ITR-3.
What is ITR-U?
ITR-U refers to the Income Tax Return Utility form introduced under Section 139(8A) of the Income Tax Act. This form allows taxpayers to update or correct their previously filed Income Tax Returns (ITRs) within a two-year window, starting from the end of the assessment year in which the original return was filed.
The ITR-U form was created to facilitate the correction of errors or omissions in earlier filed returns. By using this form, taxpayers can ensure the accurate reporting of income and rectify any discrepancies to avoid potential legal consequences.
Note: The information provided here is based on the Income Tax Act provisions as of September 2021. Always refer to the latest tax regulations and guidelines for the most current and accurate details.
ITR Update: Who Can File ITR-U?
Eligibility for Filing ITR-U:
Taxpayers can file an updated return (ITR-U) in the following cases where errors or omissions have been made in earlier returns:
Original Return of Income
Belated Return
Revised Return
An updated return can be filed under these conditions:
Failure to File the Return: If a taxpayer missed the deadline to file the original return and also the belated return deadline.
Incorrect Income Declaration: If income was inaccurately declared in the original return.
Wrong Head of Income Selection: If the wrong category or head of income was chosen in the original return.
Incorrect Tax Rate: If the tax was paid at an incorrect rate in the original return.
Reduction of Carried Forward Loss: If the taxpayer wishes to reduce the amount of carried-forward losses.
Reduction of Unabsorbed Depreciation: If the taxpayer wants to reduce unabsorbed depreciation in the subsequent return.
Reduction of Tax Credit under Section 115JB/115JC: If the taxpayer wants to decrease the tax credit under Section 115JB or 115JC.
Who Is Not Eligible to File ITR-U?
ITR-U cannot be filed in the following circumstances:
Updated Return Already Filed: If an updated return has already been filed for the particular assessment year (AY), filing another ITR-U is not allowed.
Nil Return/Loss Return: ITR-U cannot be used for filing a nil return or a return that only declares losses.
Claiming/Enhancing Refund: If the purpose is to claim or increase the refund amount, ITR-U is not applicable.
Lower Tax Liability: If filing an updated return results in lower tax liability, ITR-U cannot be filed.
Search Proceedings under Section 132: If search proceedings have been initiated under Section 132, ITR-U cannot be filed.
Survey under Section 133A: If a survey has been conducted under Section 133A, ITR-U cannot be filed.
Seizure of Documents/Assets: If the authorities have seized or requisitioned books, documents, or assets under Section 132A, ITR-U cannot be filed.
Pending/Completed Assessment/Reassessment: ITR-U cannot be filed if assessment, reassessment, revision, or re-computation is pending or has already been completed.
No Additional Tax Liability: If there is no additional tax liability after adjusting for TDS credits or losses, an updated return cannot be filed
Time Limit for Filing ITR-U
The time limit to file ITR-U is 24 months from the end of the relevant assessment year. For example:
If you need to update your return for the financial year 2019-20, you have until 31st March 2023 to file the updated ITR-U.
This period starts from 1st April 2022, when ITR-U became applicable.
How to File Form ITR-U?
Taxpayers can correct any errors or omissions in their original, belated, or revised returns by filing an updated return. Here’s how to file ITR-U:
Log into the Income Tax e-Filing Portal (https://www.incometaxindiaefiling.gov.in/).
Register (if you haven’t already) with your PAN and personal details.
Click on the “e-File” tab and select the Assessment Year for which you want to file the Updated Return.
Select the ITR-U form under the Updated Return section.
Fill in the required details in Part A of the ITR-U form (including your PAN, Aadhaar number, and assessment year).
Indicate whether you’ve previously filed a return for the same assessment year. If yes, provide the Form filed, acknowledgment number, and date of filing.
Confirm your eligibility to file an Updated Return as per Section 139(8A) of the Income Tax Act.
Choose the appropriate ITR form to update your income, and specify whether you’re filing within 12 months or between 12-24 months from the end of the relevant assessment year.
If applicable, mention if you’re filing to reduce carried forward losses, unabsorbed depreciation, or tax credit.
Complete the rest of the form and verify the details before submitting.
Pay any tax due and the additional amount (if applicable), which could be 25% or 50% of the tax and interest.
Download the acknowledgment of your updated return
How to Verify ITR-U?
Verification for Non-Tax Audit Cases:
For non-tax audit cases, the return can be verified using a Digital Signature Certificate (DSC). This ensures the authenticity and integrity of the filed return.
Verification for Tax Audit Cases:
In tax audit cases, verification is done using an Electronic Verification Code (EVC). The EVC can be obtained through various methods, including net banking, Aadhaar OTP, or an E-filing OTP sent to your registered mobile number and email
How to Compute the Tax Payable for an Updated Return?
To compute the tax payable for an updated return (ITR-U), follow these steps and match the figures accordingly:
Sr. No. Particulars Match figure from Amount (in Rs) A. Tax payable on additional income as per modified ITR (as per Part B-TTI of modified ITR) Modified ITR (submitted along with ITR-U) XXXX B. Interest levied on additional income under Section 234A/234B/234C (as per Part B-TTI of modified ITR) Modified ITR (submitted along with ITR-U) XXXX C. Late fee, if any, under Section 234F (as per Part B-TTI of modified ITR) Modified ITR (submitted along with ITR-U) XXXX D. Taxes paid or relief under TDS/TCS/Advance Tax/Regular Assessment Tax/Relief XXXX E. Total refund issued (including interest)/claimed as per the original return Original return filed XXXX F. Aggregate tax liability on additional income A + B + C + E – D XXXX G. Additional tax (25% or 50%) on (F – C) XXXX H. Net Amount Payable F + G XXXX
Is There Any Requirement to Pay Additional Tax?
There may be a requirement to pay additional tax depending on various factors such as your income, deductions, and applicable tax rates. The calculation of additional tax liability will depend on the specific details of your financial situation, as well as the tax laws and regulations in your jurisdiction.
To determine if you need to pay additional tax, it’s advisable to consult a tax professional or refer to the latest guidelines and provisions provided by the tax authority in your country.
ITR Update 2023: Key Changes and What You Need to Know
Income Tax Return (ITR) is a mandatory annual declaration for taxpayers to report their financial income for the previous year to the government. In 2023, the Indian government introduced significant updates to the ITR process to increase transparency and compliance. These updates include the introduction of new ITR forms, pre-filled forms, and a stricter penalty regime for non-compliance. The government has also expanded the scope of tax reporting, requiring individuals to disclose more information about financial investments and foreign assets. These changes aim to enhance transparency and improve tax compliance across the country.
As 2023 progresses, taxpayers must stay informed about the latest updates related to ITR. It’s essential to keep track of these changes to ensure compliance with the evolving tax laws.
1. Introduction to ITR Update 2023
The ITR Update 2023 is set to transform the way taxpayers file their returns. The government is likely to introduce new forms, enhance digital infrastructure, and tighten compliance requirements. The updates aim to simplify the tax filing process while promoting greater transparency and accountability.
2. New Forms for ITR Update
A major change in the ITR Update 2023 is the introduction of new forms to simplify the filing process. The government is expected to streamline existing forms to make them more user-friendly. Taxpayers can anticipate a simplified version of the ITR-1 form for individuals earning up to INR 50 lakh. Additionally, new forms for businesses and professionals are expected to be rolled out.
3. Changes in Tax Laws and Regulations
The ITR Update 2023 will bring several significant changes in tax laws. The government will likely introduce provisions to curb tax evasion and enhance compliance. Tax laws will be stricter for high-net-worth individuals and businesses, while measures will be taken to promote the use of digital payment methods and discourage cash transactions.
4. Tips and Tricks for Filing Your ITR
Filing your ITR might seem daunting, but with proper preparation, it can be a smooth process. Here are some useful tips to help you file your return:
Start Early: Begin collecting all necessary documents early to avoid last-minute stress. This will ensure you have enough time to file your returns properly.
Choose the Correct Form: Ensure that you’re filing the correct form based on your income and tax liabilities. If unsure, consider seeking help from a tax professional.
Declare All Income: Make sure you report all sources of income, including rental income, capital gains, and interest income.
Claim Deductions: Take advantage of all eligible deductions under the Income Tax Act to reduce your taxable income.
Verify Your Return: After filing your ITR, verify it using your Aadhaar card or by sending a physical copy of the ITR-V to the Central Processing Centre.
ITR Update Changes in the Union Budget 2021-22
In the Union Budget 2021-22, Finance Minister Nirmala Sitharaman announced that the ITR will now be pre-filled with key financial information, such as capital gains from listed shares, dividend income, and interest from banks and post offices. This change is designed to make the filing process more straightforward for taxpayers.
On March 12, 2021, the Central Board of Direct Taxes (CBDT) issued a notification requiring specific individuals and entities to furnish Statements of Financial Transactions (SFTs) under Section 285BA of the Income Tax Act. This includes information on capital gains from listed shares, mutual funds, dividends, and interest.
Starting from April 1, 2021, the Annual Information Statement (AIS) will include more comprehensive data, and taxpayers must report all income details from salary, interest, dividends, and capital gains in their ITR
Compulsory Disclosure of Transactions in ITR Update
From April 1, 2021, salaried individuals engaged in regular share trading or receiving substantial dividend income will be required to disclose this information in their ITR. Many taxpayers previously hid such transactions to avoid the complexity of calculating capital gains, reducing their tax liability, or minimizing taxes.
However, with the new update, the tax department will have access to details regarding share trading, mutual fund transactions, post office deposits, dividend income, and NBFC deposits. Any omission or delay in reporting this income could lead to severe penalties.
