Updated Income Tax Return (ITR U) – Check out this option

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Filing an Updated Income Tax Return (ITR-U) under section 139(8A)

ITR-U refers to the Updated Return form used for filing an amended or revised income tax return in India. It is a provision provided by the Income Tax Department to enable taxpayers to correct any errors, rectify omissions, or make changes to their original tax return filing. The “U” in ITR-U stands for “Updated.”

ITR-U is primarily used when individuals or entities realize that they have made mistakes in reporting their income, claiming deductions, providing incorrect details, or omitting important information in their initial tax return. By filing an updated return using ITR-U, taxpayers can rectify these errors and ensure that their tax records reflect their financial situation accurately.

The filing of ITR-U falls under Section 139(8A) of the Income Tax Act, which allows taxpayers to revise their returns within a specific time-frame. It is important to note that ITR-U is different from the regular income tax return forms (such as ITR-1, ITR-2, etc.) used for filing the original tax return.

Filing ITR-U involves providing accurate details of the original return, specifying the changes or amendments being made, and submitting the revised return electronically through the Income Tax Department’s official website or other authorized platforms. It is crucial to ensure that the updated return is filed within the prescribed deadline to avoid penalties and legal consequences.

Who can file ITR-U?

  • Return previously not filed

In the case of a return previously not filed, taxpayers can file an Updated Return to report their income and fulfill their tax obligations.

  •     Income not reported correctly

In situations where income was not reported correctly, taxpayers can file an Updated Return to rectify the error and provide accurate income details.

  • Wrong heads of income chosen

When wrong heads of income are chosen, taxpayers can use ITR-U to correct the classification and allocate income under the appropriate heads.

  • Reduction of carried forward loss

In situations involving the reduction of carried forward loss, taxpayers can file an Updated Return to adjust and reduce the carried forward loss accordingly.

  •     Reduction of unabsorbed depreciation

When there is a need for the reduction of unabsorbed depreciation, taxpayers can file an Updated Return to adjust and reduce the unabsorbed depreciation.

  •     Reduction of tax credit under Sections 115JB/115JC

In situations involving the reduction of tax credit under Sections 115JB/115JC, taxpayers can file an Updated Return to reduce the tax credit accordingly.

  •     Wrong rate of tax

When an incorrect rate of tax has been applied, taxpayers can use ITR-U to correct the rate and ensure accurate calculation of their tax liability.

Following conditions are to be satisfied to file return u/s 139(8A): 

– It should not result in a return of loss.
– It should not reduce Income Tax Liability as compared to last filed valid return.
– It should not result in increase of Refund.
– Search should not have been initiated under section 132.
– Requisition should not have been made under section 132A.
– Survey should not have been conducted section 133A or.
– Any proceeding of assessment, reassessment, re-computation or revision should not be pending or completed for that relevant year.

Who Cannot File Form ITR-U?

    Return of loss

If the updated return results in a return of loss, it cannot be filed using Form ITR-U. The form is designed for rectifying errors or making changes to the original return, not for reporting a loss.

    Reduction of income tax liability

If filing an updated return reduces the income tax liability that was declared in the earlier filed return, Form ITR-U cannot be used. The purpose of the form is not to revise the tax liability to a lower amount.

    Increase in refund

If filing an updated return leads to an increase in the refund amount compared to the return filed earlier, Form ITR-U is not applicable. The form is not intended for increasing the refund amount.

    Search or requisition

If a search has been initiated under section 132 or books of accounts or any other documents have been requisitioned under section 132A, filing Form ITR-U is not allowed.

    Survey conducted

If a survey has been conducted under section 133A, Form ITR-U cannot be used for filing an updated return.

    Pending or completed proceedings

If any assessment, reassessment, re-computation, or revision proceedings are pending or have been completed for the relevant assessment year, Form ITR-U cannot be filed.

    Information under various acts

Suppose the Assessing Officer has information against the person under the Prevention of Money Laundering Act, Black Money (Undisclosed Foreign Income and Asset) and Imposition of Tax Act. In that case, Benami Property Transactions Act, or Smugglers and Foreign Exchange Manipulators Act, and the same has been communicated to the assessee, Form ITR-U is ineligible.

    Information under DTAA agreements

If information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A, and the same has been communicated to the taxpayer before the date of furnishing the return, Form ITR-U cannot be used.

    Other notified persons

There may be specific categories of individuals or entities who are notified as ineligible to file Form ITR-U as per notifications issued by the tax authorities.

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New MCA rules make cryptocurrencies, benami, loan disclosures mandatory

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Starting April 1, companies must state if they have been declared wilful defaulters by banks, financial institutions or other lenders. The ministry also mandated companies to record audit trails of their accounts. Firms using accounting software to maintain their books need to use features that can record the audit trail of each transaction and create an edit log, including the date of such changes.

India Inc will have to declare investments in cryptocurrencies, relationships with dissolved companies and loans extended to related parties, among a host of other disclosures mandated by the government to improve transparency.

Starting April 1, companies must state if they have been declared wilful defaulters by banks, financial institutions or other lenders.

 The ministry of corporate affairs announced a new set of disclosures rules under the Companies Act on Wednesday, significantly enhancing financial and general reporting requirements for companies.

The ministry also mandated companies to record audit trails of their accounts. Firms using accounting software to maintain their books need to use features that can record the audit trail of each transaction and create an edit log, including the date of such changes.

Amending the Companies (Accounts) Rules, the ministry said firms must ensure the audit trail feature on the accounting software cannot be disabled. The move is aimed at curbing backdated entries and will affect mainly smaller companies as the bigger ones already use such software, according to Shalu Kedia, a partner at Nangia & Co.

Additional disclosures to be made under schedule III of the Companies Act, 2013, relate to matters such as corporate social responsibility spending, cryptocurrency dealings, benami property, relationship with struck-off, or dissolved, companies, and ageing of payables & receivables with vendors.

These disclosures will make it easier for the government to track non-compliance and take action against defaulting companies, experts said.

“Earlier, the companies were only required to disclose trade payables and receivables, but there was no requirement to provide ageing details. This disclosure will mandate the company to disclose the ageing payment cycle for MSMEs and non-MSME vendors,” said Nischal Arora, a partner at Nangia Andersen LLP.

Dealings in cryptocurrencies must be disclosed with details of the profit or loss on such transactions, amounts of such currency held and deposits or advances from any person for trading or investing in these currencies.

“While the government is already working on a bill on cryptocurrency, the disclosure for such currency has made it clear that the government wants to gather data on cryptocurrency,” said Arora.

Another important change was related to the disclosure of any benami property holdings.

“This disclosure is another step to improve transparency for the stakeholders as they will have to disclose any proceeding that has been initiated or pending against the company for holding any benami property and also provide a reasoning and view on the same,” said Amit Maheshwari, a partner at AKM Global.

The additional disclosures will make it mandatory for companies to provide details of shortfall in CSR spending for the previous years, including reasons for not meeting targets.

Loans granted to promoters, directors and related parties that are repayable on demand or without specific repayment terms from companies must be declared in terms of amount and percentage to total loans granted.

While this will push firms to regularly service their loans, it “will be helpful for the investor and other lenders to be aware about these types of companies before making any investment or lending the money,” Maheshwari said.

Schedule III Amendment Notification_24032021

Source: Economic Times

Finance Ministry extends deadline for making a declaration under Vivad Se Vishwas Scheme

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The reduced TDS and TCS rate will be for specific payments such as payment for a contract, professional fees, interest, rent etc.
The Direct Tax Vivad se Vishwas Act, 2020 was enacted on March 17, 2020 to settle direct tax disputes locked up in various appellate forums.

The Ministry of Finance has extended the deadline for making a declaration under Vivad Se Vishwas Scheme till 31′ January, 2021 from 31st December, 2020.

The Ministry of Finance has extended the deadline for making a declaration under Vivad Se Vishwas Scheme till 31′ January, 2021 from 31st December, 2020.

The date for the passing of order or issuance of notice by the authorities under the Direct Taxes & Benami Acts which are required to be passed/ issued/ made by 30th March 2021 has also been extended to 31st March 2021.

The Vivad se Vishwas scheme was announced by Union Finance Minister Nirmala Sitharaman during her budget speech on February 1, 2020.

Given below are all the aspects you have to know about this amnesty scheme: Under this scheme, taxpayers whose tax demands are locked in dispute in multiple forums, can pay due to taxes by March 31, 2020, and get a complete waiver of interest and penalty.

If a taxpayer is not able to pay within the deadline, he gets a further time till June 30, but in that case, he would have to pay 10% more on the tax.

MCA notifies Companies (Auditor’s Report) Order 2020 – CARO 2020.

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The government had issued new norms for auditors, seeking more disclosures in reports, a move which comes after a series of corporate scams and frauds surfaced over the past few years.

CARO 2020 – Companies (Auditor’s Report) Order, 2020

MCA in place of existing the Companies (Auditor’s Report) Order, 2016, has notified CARO 2020 after consultation with the National Financial Reporting Authority constituted under section 132 of the Companies Act, 2013.

Auditor’s report to contain matters specified in paragraphs 3 and 4. – Every report made by the auditor under section 143 of the Companies Act on the accounts of every company audited by him, to which this Order applies, for the financial years commencing on or after the 1st April, 2019, shall in addition, contain the matters specified in paragraphs 3 and 4, of the CARO 2020.

Provided this Order shall not apply to the auditor’s report on consolidated financial statements except clause (xxi) of paragraph 3.

It shall come into force on the date of its publication in the Official Gazette.

CARO 2020 – Key changes/highlights

Matters to be included in auditor’s report, in CARO 2020 – the reporting clauses are more extensive and detailed than were in CARO2016

Unlike CARO 2016, which required reporting on all fixed assets, new reporting requirements pays attention to Property, Plant, Equipment and intangible assets.

Reporting on revaluation of Property, Plant and Equipments by company

Reporting of proceedings under the Benami Transactions (Prohibition) Act, 1988.

Reporting of compliances if company was sanctioned working capital limits in excess of Rs.5 crores or more from banks or financial institutions.

 – whether the quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of account of the Company, if not, to give details;

Reporting of investments in or in providing of any guarantee or security or granting any loans or advances to companies, firms, Limited Liability Partnerships or any other parties.

Reporting of compliances with RBI directives and the provisions the Companies Act with respect to deemed deposits.

Reporting with respect to transactions not recorded in the books of account surrendered or disclosed as income in the income tax proceedings.

Comprehensive reporting requirement for default in the repayment of loans / other borrowings or in the payment of interest

 – whether the company is a declared wilful defaulter by any bank or  financial institution or other lender; 

 – whether term loans were applied for the purpose for which the loans were obtained; if not, the amount of loan so diverted and the purpose for which it is used may be reported; 

 – whether funds raised on short term basis have been utilised for long term purposes,  if yes, the nature and amount to be indicated

Reporting on treatment by auditor of whistle-blower complaints received during the year by the company 

Reporting on internal audit system

 – whether the company has an internal audit system commensurate with the size and nature of its business; 

 – whether the reports of the Internal Auditors for the period under audit were considered by the statutory auditor;   

Reporting on cash losses

Reporting on resignation of the statutory auditors

Reporting on uncertainty of company capable of meeting its liabilities

Reporting transfer of unspent CSR amount to Fund specified in Schedule VII

Reporting on qualifications or adverse remarks by the auditors in the CARO reports of companies included in the consolidated financial statements

It is expected that CARO, 2020 will improve the overall quality of reporting by the auditors and thereby lead to “greater transparency and faith in the financial affairs of the companies.”

Read : CARO 2020 dated 25.02.2020

CBDT extends till Jan 31 deadline for compounding of I-T offences

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Taxpayers get one more chance to clear their tax dues.

The CBDT has extended till January 31 the last date for taxpayers to avail a “one-time” facility to apply for compounding of income tax offences, an order issued on Friday said.

The earlier deadline was December 31, 2019.

In I-T parlance, compounding means that the taxman does not file a prosecution case against the offender or tax evader in court in lieu of payment of due taxes and surcharges.

The decision to extend the last date was taken “in view of references received from field formations, including requests made by ICAI (Institute of Chartered Accountants of India) chapters wherein it has been brought to the notice of the CBDT that the taxpayers could not avail the benefit of the one-time relaxation window due to genuine hardships,” the order issued by the Central Board of Direct Taxation (CBDT) said.

The order was accessed by PTI.

Final opportunity
Hence, the order stated, the date has been extended to give a final opportunity to such taxpayers and reduce the pendency of existing prosecution cases before the courts.

Applications, as per the procedure of the scheme, are to be filed before the appropriate competent authority that is either a principal chief commissioner or a chief commissioner or a principal director general or director general of the Income-Tax Department “on or before” January 31, 2020.

The CBDT, while launching the scheme in September last year, had said that this “one-time measure” is being undertaken to mitigate unintended hardship to taxpayers in deserving cases and to reduce the pendency of existing prosecution cases before the courts.

“Cases have been brought to the notice of CBDT where the taxpayers could not apply for compounding of the offence as the compounding application was filed beyond 12 months,” it had said.

The riders
The relaxation, however, shall not be available in respect of an offence which is generally or normally not compoundable, indicating instances of serious tax evasion, financial crime, terror financing, money laundering, possession of illegal foreign assets, benami properties or conviction by a court in the past.

The CBDT circular added that application for compounding of an income tax offence can be filed in cases where: Prosecution proceedings are pending before any court of law for more than 12 months or any compounding application for an offence filed previously was withdrawn by the applicant solely for the reason that such application was filed beyond 12 months or any compounding application for an offence had been rejected previously solely for technical reasons.

The CBDT, which frames policy for the tax department, had earlier said that compounding of offences is “not a matter of right” and the department can extend such a relief only in certain cases.

This will be done keeping in view factors like “conduct of the person, the nature and magnitude of the offence on the context of the facts and circumstances of each case,” it had said.

CBDT warns Cash Transactions above Permissible Limits

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CBDT warns Cash Transactions above Permissible Limits

With a view to promoting cashless transactions, the Central Board of Direct Taxes ( CBDT ) has issued an advisory on its official website regarding cash transactions over and above the prescribed limits specified under the law.

 

The advisory issued by the Board remind the taxpayers to not accept cash of two lakh or more in aggregate from a single person in a day or for one or more transactions relating to one event or occasion.

 

One of the major steps introduced by the Government after the demonetization was to restrict cash transaction above Rs. 2 lakh rupees.

 

Under the Finance Act, 2017, the amounts in excess of Rs. 20,000 or more shall be received or repaid in cash for transfer of Immovable Property and amount more than Rs. 10,000/- in cash relating to the expenditure of business/profession was also banned.

 

Further, amount in excess of Rs. 2,000/- in cash cannot be donated to a registered trust /political party.

 

The department further reminded that the contravention may result in the levy of tax/ penalty.

 

The CBDT advisory said that any payment made in cash on account of the premium on health insurance facilities is not allowable as a deduction under section 80D of the Income Tax Act.

 

“Any information regarding black money including information about undisclosed income/ assets (both in India as well as abroad) and Benami transactions can be given to the jurisdictional Director General/ Pr. General of Income Tax (Investigation),” it said.

 

The CBDT has recently announced a new scheme called Income Tax Informants Rewards Scheme 2018 through which the department will reward up to 5 crore rupees to informants.

 

The scheme regulates grant and payment of reward to a person who is an informant under this scheme.

 

Also, the Benami Transactions Informants Reward Scheme 2018 has been announced for regulating grant for informants giving information relating to benami property actionable under Prohibition of Benami Property Transactions Act, 1988, as amended by Benami Transactions (Prohibition) Amendment Act, 2016.