In addition to routine details of name, permanent account number (PAN), tax years, additional income reported etc., Form ITR-U requires taxpayer to select reason for submitting updated return from out of the eight options provided, including (1) return previously not filed or (2) income not reported correctly or (3) wrong head of income chosen or (4) wrong rate of tax or (5) reduction of carried forward losses, unabsorbed depreciation (UAD) or Minimum Alternate Tax (MAT) credit/Alternate Minimum Tax (AMT) credit. The updated return has to be furnished in Form ITR-U, along with an updated version of applicable tax return form (Form ITR 1 – 7). The CBDT, in deference to powers conferred under such new scheme, has notified the Rule containing the new tax return form and the manner to furnish such updated return. The scheme is introduced with the object of providing an opportunity for voluntary compliance by taxpayers in order to rectify errors in the last valid return filed and to reduce litigation. While furnishing updated return, the taxpayer is also required to pay an additional tax of 25% or 50% on tax and interest due on such updated return while providing for immunity from penalty and prosecution. The Notification is issued pursuant to the introduction of the new scheme under the Income Tax Laws (ITL) by Finance Act (FA) 2022, which permits all taxpayers to file an “updated return” within 36 months from the end of the relevant tax year, subject to various conditions. This Tax Alert summarizes the key highlights of Notification No.48/2022 dated 30 April 2022 issued by the Central Board of Direct Taxes (CBDT) which amends the Income Tax Rules, 1962 by inserting Rule 12AC which provides for tax return form (Form ITR-U) and the manner for furnishing updated return.
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