Latest Update on ITR (U) Form: What You Need to Know

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Income Tax Department to Update ITR Forms for Section 87A Tax Rebate Claims for FY 2023-24

The Income Tax Department has recently made significant updates to the ITR (U) form, also known as the Updated Income Tax Return. This form allows taxpayers to rectify errors or omissions in their previously filed returns. Here’s a detailed look at the latest changes and what they mean for taxpayers:

What is ITR (U)?

ITR (U) is a provision under Section 139(8A) of the Income Tax Act, which allows taxpayers to file an updated return within two years from the end of the relevant assessment year. This form is particularly useful for correcting minor errors or omissions in the original return.

Key Updates:

  1. Extended Filing Deadline: The deadline for filing revised and belated ITRs has been extended to January 15, 2025. This extension is to enable taxpayers to claim the Section 87A tax rebate3.
  2. Manual Editing for Rebate Claims: Taxpayers can now manually edit the tax rebate column in the ITR excel utility to claim the Section 87A tax rebate. This is necessary due to the outdated JSON schema in the processing software.
  3. HTML Utilities: The Income Tax Department has updated the Excel utilities for ITR Forms 2 and 3 and announced that HTML utilities will be released soon.
  4. Restrictions on ITR (U): ITR (U) cannot be filed for nil returns, loss returns, or to claim/enhance refunds. It is only for correcting errors or omissions2.

How to File ITR (U):

  1. Gather Necessary Documents: Collect all relevant documents such as Form 16, Form 26AS, bank statements, and other income-related documents.
  2. Download the Utility: Select and download the appropriate ITR form from the Income Tax Department’s website.
  3. Fill in Details: Enter the correct details, including income from various sources, deductions, and taxes paid.
  4. Compute Tax Liability: Calculate your tax liability using an online tax calculator.
  5. Pay Pending Taxes: Pay any pending taxes before submitting the ITR.
  6. File the ITR: Submit the ITR form online on the Income Tax Department’s website.

The provision of section 139(8A) shall not apply, if the updated return

(a) is a return of a loss; or

(b) has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5); or

(c) results in refund or increases the refund due on the basis of return furnished under sub-section (1) or sub-section (4) or sub-section (5), of such person under this Act for the relevant assessment year:

Further, a person shall not be eligible to furnish an updated return under this sub-section, where

(a) a search has been initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A in the case of such person; or

(b) a survey has been conducted under section 133A, other than sub-section (2A) of that section, in the case of such person; or

(c) a notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belongs to such person; or

(d) a notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person, for the assessment year relevant to the previous year in which such search is initiated or survey is conducted or requisition is made and any assessment year preceding such assessment year:

(e) any proceeding for assessment or reassessment or re-computation or revision of income under this Act is pending or has been completed for the relevant assessment year; or

(f) the Assessing Officer has information in respect of such person for the relevant assessment year in his possession under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976) or the Prohibition of Benami Property Transactions Act, 1988 (45 of 1988) or the Prevention of Money-laundering Act, 2002 (15 of 2003) or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015) and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or

(g) information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or

(h) any prosecution proceedings under the Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of furnishing of return under this sub-section; or

(i) he is such person or belongs to such class of persons, as may be notified by the Board in this regard:

Important Considerations:

  • Manual Editing Required: For claiming the Section 87A tax rebate, manual editing of the tax rebate column is necessary.
  • JSON Schema Issue: The processing software’s JSON schema is outdated, causing issues with rebate claims. The department has been working on updating it.

Conclusion:

The recent updates to the ITR (U) form are a positive step towards improving tax compliance and providing taxpayers with the opportunity to correct their returns. However, taxpayers must be aware of the manual editing requirement and the ongoing issues with the processing software.

CBDT extends deadline for furnishing belated / revised ITRs for Asst Year 2024-25 to January 15th, 2025

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The deadline for furnishing belated or revised Income Tax Returns (ITRs) for the Assessment Year (AY) 2024-25 has been extended from December 31, 2024, to January 15, 2025.

The Central Board of Direct Taxes (CBDT) has announced an extension for furnishing belated or revised income tax returns for the Assessment Year (AY) 2024-25. In a recent notification, the CBDT exercised its powers under Section 119 of the Income-tax Act, 1961, to extend the deadline for resident individuals.

The Central Board of Direct Taxes (CBDT) has announced a significant extension for taxpayers

The deadline for furnishing belated or revised Income Tax Returns (ITRs) for the Assessment Year (AY) 2024-25 has been extended from December 31, 2024, to January 15, 2025.

What does this mean to Taxpayers?

This extension provides taxpayers with additional time to file their belated returns under Section 139(4) or revised returns under Section 139(5) of the Income-tax Act, 1961

This move is particularly beneficial for those who missed the initial filing deadline of July 31, 2024, or need to correct unintentional errors or omissions in their original filings.

Rationale for the Extension

The CBDT’s decision to extend the deadline is aimed at reducing the stress on taxpayers and ensuring they have ample time to comply with their tax obligations. This extension is especially helpful for individuals who may have received intimations for mismatches in their Annual Information System (AIS) and reported income or transactions.

Penalties and Fees

It’s important to note that filing belated returns usually incurs penalties, including an interest charge of 1% per month under Section 234A and late filing fees amounting to ₹5,000 for incomes exceeding ₹5 lakh or ₹1,000 for incomes below this threshold. However, the revised returns do not attract penalties and can be filed multiple times within the allowed period.

Welcome reliefs

The extension is a welcome relief for many taxpayers, providing them with the necessary time to ensure their tax filings are accurate and complete. It’s a reminder of the importance of staying informed and proactive about tax obligations to avoid last-minute stress.

https://incometaxindia.gov.in/communications/circular/circular-no-21-2024.pdf

CBDT extends due date for filing ITR of Audited Accounts till November 15,2024

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The income tax department on Saturday extended the deadline for filing income tax returns by corporates by 15 days till November 15 for assessment year 2024-25. In a circular, the Central Board of Direct Taxes (CBDT) said the deadline will be extended from the earlier target date of October 31.

The Central Board of Direct Taxes (CBDT) has recently announced extension of the due date for filing Income Tax Returns (ITR) for audited accounts for Asst Year 2024-25.


In a recent announcement, the Central Board of Direct Taxes (CBDT) has extended the due date for filing Income Tax Returns (ITR) for audited accounts from October 31, 2024, to November 15, 2024.



–  This extension applies to taxpayers who are required to undergo a tax audit, providing them with additional time to ensure accurate and compliant filings.


– The decision to extend the deadline comes as a relief to many taxpayers and professionals who were concerned about meeting the original deadline amidst the upcoming festive season.



– The extension is expected to ease the pressure on taxpayers and professionals, allowing them to prioritize accuracy and compliance without the stress of last-minute filings



– This move also aligns with the CBDT’s ongoing efforts to support taxpayers and enhance the overall compliance process.


– As the new deadline approaches, taxpayers are encouraged to take full advantage of this additional time to gather their financial documents and ensure thorough and accurate reporting.


– This extension is a welcome change, especially during a peak period, and is likely to reduce disputes and penalties associated with late submissions.

 

CBDT Circular-10-2024

 

Tax Audit Report due date extended to 07-October-2024

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Considering the difficulties faced by taxpayers in electronic filing of various audit reports under the Income Tax Act, the deadline is being extended from September 30 to October 7.
CBDT has extended the specified date of furnishing of Tax Audit Report under any provision of the Act for the Financial Year 2023-24, which was 30th September, 2024 to 07th October, 2024.
 
The reason behind the extension is because of difficulties faced by the taxpayers and other stakeholders in the electronic filing of various reports.
 
In its latest report, CBDT said, “On consideration of difficulties faced by the taxpayers and other stakeholders in electronic filing of various reports of audit under the provisions of the Income-tax Act,1961 (Act), the Central Board of Direct Taxes (CBDT), in the exercise of its powers under Section 119 of the Act, extends the specified date of furnishing of report of audit under any provision of the Act for the Previous Year 2023-24, which was 30th September, 2024 in the case of assessees referred in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act, to 071h October, 2024.”
 
Tax Audit involves an expression of the tax auditor’s opinion on the truth and correctness of certain factual details, furnished by the assessee to the Income Tax Authorities to enable correct assessment of total income considering all allowances, deductions, losses, adjustments, exemptions etc. and determination of tax thereon.
 
It is conducted to ensure proper maintenance and correctness of books of accounts by the taxpayer and certification of same by the CA. This is to discourage tax avoidance and evasion, the requirement of a tax audit that was introduced by inserting a new section 44AB in the Income Tax Act.
 
There are two types of forms for filing income tax audit reports namely 3CA-3CD and 3CB-3CD.
Form 3CA-3CD is applicable in case of a person who is required by or under any law to get their accounts audited; while Form 3CB-3CD is applicable in case of a person not being a person referred above i.e. where accounts are not required to be audited under any other law.
 
Meanwhile, rule 6G prescribes the manner of reporting and furnishing of Report of Audit of accounts to be furnished under section 44AB, which is meant for the audit of accounts of certain persons carrying on business or profession.
 

CBDT Circular -10-2024

 

GST Invoice Management System: A game changer for businesses from October 2024

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The GSTN has introduced a transformative feature called the IMS on the GST portal aimed at simplifying the process of correcting invoices
The GSTN has introduced a transformative feature called the IMS on the GST portal aimed at simplifying the process of correcting invoices

Through an advisory issued on September 3, 2024, the IMS is set to go live for taxpayers starting October 1, 2024, marking a significant milestone in the evolution of GST compliance procedures.

Key Features of the GST Invoice Management System (IMS)

The GST Invoice Management System (IMS) offers businesses a streamlined approach to managing their GST invoices, particularly in cases where discrepancies or amendments are necessary.

According to the GSTN advisory, “To enable taxpayers to efficiently address invoice corrections/amendments with their suppliers through the portal, a new communication process called the Invoice Management System (IMS) is being brought up at the GST portal.”

This system is designed to help businesses reconcile their GST records with those issued by their suppliers, ensuring ITC claims are compliant and accurate.

One of the standout features of IMS is that it allows taxpayers to accept, reject, or keep invoices pending before including them in their GST ITC claims.

This ensures that businesses can review the accuracy of each GST invoice and avoid potential issues during audits. The flexibility offered by the system allows businesses to defer action on GST invoices and address them in future tax periods, if necessary.

Taxpayers can update their GST invoice records anytime before filing their GSTR-3B return, a critical component in the GST compliance process.

Impact of the GST Invoice Management System on the ITC Ecosystem

The IMS is expected to significantly enhance the efficiency of ITC claims under the GST regime by providing a more structured mechanism for matching invoices between recipients and suppliers.

Since mismatches in GST invoices have been a primary source of discrepancies in ITC claims, the new system is a welcome addition.

The GSTN has long sought to introduce this level of control to minimize incorrect or fraudulent ITC claims.

Under this system, only accepted GST invoices will form part of the taxpayer’s GSTR-2B, which is the auto-populated form used to claim ITC under the GST framework.

By ensuring that only verified invoices are included in this form, businesses can significantly reduce errors in their GST returns, thus reducing the risk of disputes or penalties during audits.

Moreover, the IMS integrates seamlessly with the Quarterly Return Monthly Payment (QRMP) scheme, which allows smaller taxpayers to file GST returns quarterly while making monthly GST payments. For those enrolled in the QRMP scheme, the IMS will generate GSTR-2B on a quarterly basis, making it easier to manage GST invoices and ITC claims. This feature is particularly beneficial for small and medium-sized enterprises (SMEs), which often struggle with the administrative burden of GST compliance.

“The IMS is expected to facilitate transparency between GST recipients and suppliers and streamline the reconciliation of ITC, which has been a challenging process since the introduction of GST.”

While the full benefits of the system will become evident after its implementation, the IMS is expected to address several long-standing issues in GST compliance.

Source: Invoice Management System

Advisory on reporting of supplies to un-registered dealers in GSTR-1/GSTR-5

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<strong><em>Reporting of inter-state taxable outward supplies to unregistered dealers - Advisory by GST.</em></strong>
Reporting of inter-state taxable outward supplies to unregistered dealers – Advisory by GST.

An advisory has been issued on September 3,2024 by the Government of India for the recent amendment under Notification No. 12/2024 Central Tax, dated 10th July 2024, that lessens the threshold limit for the reporting of inter-state taxable outward supplies to unregistered dealers.

The invoice-wise reporting of information of these supplies was lessened from Rs 2.5 lakh to Rs 1 lakh, impacting how businesses file their GSTR-1 and GSTR-5 returns.

As per the notification, the above reduction in the threshold would need the assesses to furnish the detailed invoice-wise data for all inter-state supplies to unregistered dealers that surpass Rs 1 lakh in value. The same information should be reported in Table 5 of Form GSTR-1, for regular tax payers and Table 6 of GSTR-5, for non-resident taxable persons.

The same advisory states that the said revisions are being executed at present in the Goods and Services Tax (GST) portal and will be available for taxpayers shortly.

In the interim, taxpayers need to continue reporting inter-state taxable outward supplies to unregistered dealers that surpass the previous threshold of ₹2.5 lakh. These must be filed in Table 5 of GSTR-1 for regular taxpayers and Table 6 of GSTR-5 for non-resident taxable persons.

Further, till the time the functionality gets updated and is made available to the GST portal, it is advised to continue reporting the invoice wise details of taxable outward supplies to unregistered dealers which are more than Rs. 2.5 Lakhs in the Table 5 of Form GSTR-1 and Table 6 of GSTR-5, which would facilitate the process of reporting and align it with the amended threshold limits.

The businesses are suggested to stay updated with the additional announcements on the operationalization of the revision and the assesses are advised to track the updates on the GST portal for the additional guidelines.

Source: Advisory on GSTR-1/ GSTR-5

Highlights from the 53rd GST Council Meeting

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Several measures were proposed to ease compliance and reduce litigation for taxpayers 53rd GST council meeting.
Several measures were proposed to ease compliance and reduce litigation for taxpayers in the 53rd GST council meeting.

The 53rd meeting of the Goods and Services Tax (GST) Council was held on June 22 in New Delhi. Several recommendations were made at the meet to refine tax rates and service exemptions under the GST regime.

The meeting, chaired by Union Finance Minister Nirmala Sitharaman, deliberated on various proposals to streamline GST applicability across goods and services.

Many items were present on the agenda from this GST Council meeting. Further, before the GST Council meeting, the Union FM had a pre-budget consultation with various states and UTs. Union FM also clarified that as of 31st December 2023, less than 1.96% of GST taxpayers received the notices under GST (1,14,999 taxpayers).

Several measures were proposed to ease compliance and reduce litigation for taxpayers.

Here are the key highlights:

Ease of compliance burden of taxpayers

  • Changes will be allowed in GSTR-1 going forward within same tax period: The GST Council approved implementing a functionality for a new form GSTR-1A that allows taxpayers to add/amend particulars of GSTR-1 of current tax period/IFF for 1st and 2nd month of quarter, that is missed out before filing GSTR-3B.
  • Reporting B2C supplies in GSTR-1: The threshold for reporting Business-to-Consumers (B2C) interstate supplies invoice-wise in Table 5 of GSTR-1 will be reduced from Rs.2.5 lakh to Rs.1 lakh.
  • GSTR-4 Due Date Revised: Extension provided to the due date for filing GSTR-4 by the composition taxable persons from the present 30th of April to 30th of June 2024 from FY 2024-25 onwards.
  • TCS Rate Reduction: Electronic Commerce Operators (ECOs) had to collect Tax Collected at Source (TCS) at 1% (0.5% each under CGST and SGST/ 1% under IGST) on net taxable supplies under Section 52(1) of the CGST Act. It is recommended to reduce this to 0.5 % (0.25% under CGST and 0.25% under SGST/UTGST/0.5% under IGST).
  • Compulsory filing of GSTR-7: GSTR-7 must be filed mandatorily even if no TDS is deducted, reported invoice-wise and no late fee will be charged for nil filing.
  • GSTR-9/9A filing applicability: The filing of annual return in GSTR-9/9A for the FY 2023-24 would be exempted for taxpayers with an aggregate annual turnover upto Rs.2 crore.
  • Modification to Section 16(4): The time limit to avail ITC for invoices or debit notes in any GSTR-3B filed up to 30th November 2021 (applicable for fiscal years 17-18, 18-19, 19-20 and 20-21) may be deemed to be 30th November 2021, which will apply retrospectively from 1st July 2017. Furthermore, Section 16(4) shall be relaxed where returns for the period from the date of cancellation of registration/ effective date of cancellation of registration till the date of revocation of cancellation of the registration, are filed by the registered person within thirty days of the order of revocation.
  • Amendment to CGST Rule 88B: The GST Council has recommended not to charge interest on the amount available in the electronic cash ledger on the due date of filing GSTR-3B and is debited while filing the said return in cases of delayed filing of GSTR-3B.
  • New Section 128A: GST Council has waived interest and penalties for demand notices issued u/s 73 of CGST (applicable for fiscal years 17-18, 18-19 and 19-20) for cases not involving fraud, suppression and misstatement. It is applicable to cases where the taxpayer pays the full amount in the notice by 31st Mar 2025.
  • Changes in Section 73 and 74: A common time limit will be set for issuing demand notices and orders under both these provisions without differentiating cases as fraud/non-fraud. The time limit for the taxpayers to claim the benefit of reduced penalty, by paying the tax demanded along with interest, would be increased from 30 to 60 days.
  • Monetary Limits set for GST Appeals: The recommended monetary limits for filing appeals by the department before these legal fora are Rs.20 lakh for GST Appellate Tribunal, Rs.1 crore for HC and Rs.2 crore for SC. 
  • Amending Sections 107 and 112:  The maximum amount for pre-deposit for filing appeal before appellate authorities shall be reduced from Rs.25 crore under CGST and Rs.25 crore under SGST to Rs.20 crore respectively. Moreover, the amount of pre-deposit for appeal before the GST Appellate Tribunal has been reduced from 20% with a maximum amount of Rs.50 crores under CGST and Rs.50 crores under SGST to 10% with a maximum of Rs.20 crores under CGST and Rs.20 crores under SGST.
  • Sunset Clause to amend Sections 109 & 117: Sunset clause to be added for anti-profiteering cases pending and decision taken to shift the hearing panel from CCI to principal bench of GSTAT. The GST Council has also recommended the sun-set date of 1st April 2025 for receiving any new application regarding anti-profiteering.
  • Time limit to file appeals before the GSTAT: The GST Council recommended modifying Section 112 to provide a 3 months time for filing appeals before the GST Appellate Tribunal. It will start from a date yet to be notified by the Government, most likely to be announced by 5th August 2024 as this is the last date.
  • New Section 11A: The new provision allows regularization of non-levy or short levy of GST, where tax was being underpaid or unpaid due to common trade practices. 
  • IGST Refund due to upward price revisions after exports: A mechanism is being introduced for claiming refund of additional IGST paid due to any upward revision in price of the goods after their export, helping taxpayers claim refunds for paying additional IGST due to such move.
  • No refund of IGST in specific case: Where export duty is payable, IGST will not be refunded by modifying Sections 16 and 54. This applies for both exports and supplies to SEZ unit/developer with or without payment of tax.
  • Biometric-based Aadhaar Authentication: Those applicants who have opted for Biometric based Aadhaar authentication conducted at the GST Suvidha Kendra will be rolled out for GST registration on all-India basis in a phased manner.
  • DRC-03 Circular expected to be notified: A circular will be issued to prescribe a mechanism for adjusting any demand amount paid through DRC-03 against the amount payable as pre-deposit for filing GST appeal.
  • Section 122(1B) to be amended: Amendment will apply retrospectively w.e.f. 1st October 2023, so as to clarify that the said penal provision is applicable only for those e-commerce operators, who are required to collect TCS u/s 52 and not for other e-commerce operators.
 
Rate rationalisation for Goods and Services

The GST Council announced several GST rate revisions and exemptions for goods and services, as listed below-

Particulars

New GST Rates / Exemptions

Extra Neutral Alcohol used for the manufacture of alcoholic liquor for human consumption

Exempt

Imports of parts, components, testing equipment, tools, and tool-kits of aircraft, irrespective of their HS classification, are used to boost the MRO activities subject to specified conditions.

5% IGST

Parts of Poultry keeping Machinery

12%

All milk cans (different materials), irrespective of use

12%

All carton boxes and cases of both corrugated and non-corrugated paper board

12%

All types of sprinklers, including fire water sprinklers

12%

All solar cookers, whether or not single or dual energy source

12%

Services provided by Indian Railways to common man for sale of platform tickets, cloak rooms, and battery operated car services are exempted, including intra railway supplies

Exempt

Service by way of hostel accommodation is currently not exempted if outside educational institution upon satisfying the conditions that the rent limit is up to Rs. 20,000 per person per month, and the service is rendered for a continuous period of 90 days

Exempt

Corporate guarantee if in case it is for services or goods where whole ITC is available

Exempt

Services provided by Special Purpose Vehicles (SPV) to Indian Railway by way of allowing Indian Railway to use infrastructure built & owned by SPV during the concession period and maintenance services supplied by Indian Railways to SPV

Exempt

Imports of specified items for defence forces

IGST is exempt for five years till 30th June 2029

Imports of research equipment/buoys imported under the Research Moored Array for African-Asian-Australian Monsoon Analysis and Prediction (RAMA) programme subject to specified conditions

IGST is exempt

Imports in SEZ by SEZ Unit/developers for authorised operations with effect from 1st July 2017

Compensation Cess is exempt

Supply of aerated beverages and energy drinks to authorised customers by Unit Run Canteens under the Ministry of Defence

Compensation Cess is exempt

Import of technical documentation for AK-203 rifle kits imported for the Indian Defence forces.

Ad hoc IGST exemption provided

These measures aim to streamline the GST compliance process, provide clarity on various issues, and ensure consistency across the GST framework. The recommendations will be implemented through relevant circulars, notifications, and law amendments.

Source:

53rd GST Council Recommendations