ITR U for Missed HRA and LTA Claims: How to Correct Your ITR
Many taxpayers fail to claim House Rent Allowance (HRA) and Leave Travel Allowance (LTA) while filing their Income Tax Return (ITR), resulting in higher taxable income and unnecessary tax payments. If you have missed claiming these exemptions, you can correct your return by filing ITR U under Section 139(8A) of the Income Tax Act, 1961.
ITR U allows taxpayers to update their ITR within 24 months from the end of the relevant assessment year. This provides a valuable opportunity to rectify omissions, including missed HRA and LTA exemptions, and reduce tax liability.
This article explains who can file ITR U, how to claim missed HRA and LTA, and the step-by-step process for filing an updated return.
Table of Contents
What is ITR U?
ITR U is a form introduced for taxpayers who need to update their Income Tax Return after the original or revised filing deadline has passed. It helps rectify unclaimed deductions, incorrect income declarations, or omitted exemptions.
Key Features of ITR U:
Time Limit: Can be filed within 24 months from the end of the relevant assessment year.
One-Time Filing: Can be filed only once per assessment year.
Additional Tax: Requires payment of 25% or 50% additional tax based on when it is filed.
Cannot be Used for Refund Claims: ITR U is not applicable if the taxpayer is seeking a refund.
Budget 2025 Update: Extended Deadline for Filing Updated Return (ITR-U)
The government has extended the time limit to file an Updated Income Tax Return (ITR-U) from 2 years to 4 years after the relevant assessment year. This provides taxpayers more time to correct errors and comply with tax regulations. However, an additional tax must be paid when filing an updated return.
Additional Tax Payable on ITR-U
ITR-U Filed Within | Additional Tax on Due Amount |
12 months | 25% |
24 months | 50% |
36 months | 60% |
48 months | 70% |
Key Points to Remember
A belated or revised ITR cannot be filed after December 31 of the assessment year.
ITR-U can be filed from January 1 of the assessment year to correct mistakes.
ITR-U cannot be used to:
Reduce tax liability
Claim refunds
Increase losses
Important Deadlines
For FY 2023-24 (AY 2024-25): ITR-U must be filed by March 31, 2027
For AY 2022-23: The last date for ITR-U is March 2025
How to Claim Missed HRA in ITR U?
Who Can Claim HRA Through ITR U?
You can file ITR U to claim HRA exemption if:
You are a salaried employee and receive HRA as part of your salary.
You forgot to claim HRA while filing your ITR.
Your employer did not include HRA exemption in Form 16.
You have valid proof of rent payments.
Steps to Claim HRA in ITR U:
Gather Documents: Keep rent receipts, lease agreements, and bank transfer proofs ready.
Calculate HRA Exemption: Use the formula to determine the exempt amount:
Actual HRA received
50% of basic salary (metro cities) or 40% (non-metro cities)
Rent paid - 10% of basic salary (Least of these three is exempted)
Download and Fill ITR U Form from the e-filing portal.
Mention Additional Tax, If Applicable: If the correction leads to reduced tax liability, no additional tax is required.
File the Updated Return and Verify It.
How to Claim Missed LTA in ITR U?
Who Can Claim LTA Through ITR U?
You can claim LTA exemption via ITR U if:
You undertook a valid domestic trip but forgot to claim the exemption.
Your employer did not process the LTA claim in Form 16.
You have valid proof of travel expenses (tickets, boarding passes, invoices).
Steps to Claim LTA in ITR U:
Ensure Eligibility: LTA is exempt under Section 10(5) only for domestic travel expenses (flights, trains, buses).
Gather Documents: Collect tickets, invoices, and boarding passes.
Calculate the LTA Exemption: The amount is limited to actual travel costs incurred.
Fill ITR U and Mention Exemption: Enter the exempted amount under Exempt Income.
File the Updated Return and Submit Verification Documents If Required.
ITR U for Missed HRA and LTA: Understanding Additional Tax Implications
Filing ITR U for missed HRA and LTA claims comes with the responsibility of paying additional tax if the correction results in an increased tax liability. The Income Tax Department imposes an additional tax charge based on when the updated return is filed:
Within 12 months from the end of the assessment year – Taxpayers must pay an additional 25% of the due tax and interest.
Between 12 to 24 months from the end of the assessment year – The additional tax increases to 50% of the due tax and interest.
Between 24 to 36 months from the end of the assessment year – The additional tax increases to 60% of the due tax and interest.
Between 36 to 48 months from the end of the assessment year – The additional tax increases to 70% of the due tax and interest.
This additional tax ensures that taxpayers who failed to declare accurate information earlier do not gain an unfair advantage over those who filed correctly. It is crucial to compute this amount correctly before submitting ITR U for HRA and LTA exemptions, as failure to pay the required tax may lead to further scrutiny and penalties.
ITR U for Missed HRA and LTA: Ensuring Compliance with AIS and TIS
Before filing ITR U for missed HRA and LTA claims, taxpayers should verify their income details in the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) available on the Income Tax e-filing portal. These statements provide pre-filled tax data based on income sources reported by employers, banks, and other entities.
Mismatch Issues: AIS and TIS primarily include details about income sources, TDS, tax payments, and high-value transactions but may not explicitly report HRA and LTA exemptions. However, discrepancies between the salary reported in AIS/TIS and the HRA/LTA claimed in ITR U can raise red flags. If the total salary after exemptions does not match pre-reported income, it could trigger an inquiry from the tax department.
Verification Before Filing: Taxpayers must cross-check Form 16, bank statements, salary slips, and travel proofs with AIS and TIS data to ensure that the updated return reflects accurate and consistent information.
Avoiding Tax Notices: Ensuring that the updated return matches the pre-reported data in AIS and TIS helps in reducing the likelihood of tax notices or additional scrutiny by the Income Tax Department.
ITR U Filing Process for Missed HRA and LTA
Log in to the Income Tax Portal – Visit incometax.gov.in and log in with your PAN and password.
Go to ‘File Income Tax Return’ – Select the relevant assessment year.
Choose ITR U – Select the reason for updating the return (Missed HRA/LTA claims).
Enter Corrected Income Details – Report the revised taxable income after deducting HRA/LTA.
Pay Additional Tax (if applicable) – If the updated ITR leads to higher tax liability, an additional tax of 25% (within 12 months) or 50% (after 12 months) must be paid.
Verify and Submit the Return – Complete verification using Aadhaar OTP, net banking, or EVC.
Check ITR U Status – Track status in ‘My Returns’ section on the portal.
Common Mistakes to Avoid While Filing ITR U for HRA and LTA
Not verifying Form 16 – Ensure that your employer has not already considered HRA/LTA.
Incorrect exemption calculation – Use the correct formula to compute the exempt amount.
Missing supporting documents – Rent receipts, lease agreements, and travel proofs are required.
Filing ITR U to claim a refund – ITR U cannot be filed for claiming refunds.
Conclusion
ITR U is a useful provision that allows taxpayers to correct missed HRA and LTA claims and reduce tax liability. However, it requires proper documentation and timely filing. By following the correct process and verifying all details, taxpayers can ensure compliance and avoid penalties.
FAQ
1. Can I claim both HRA and LTA in a single ITR U filing?
Yes, you can update both HRA and LTA in the same ITR U filing, provided you have supporting documents.
2. What if I already filed a revised return? Can I still file ITR U?
Yes, ITR U is applicable even if a revised return was filed earlier, as long as it’s within 24 months.
3. Do I need my employer’s approval to claim HRA or LTA in ITR U?
No, but you must retain valid proof of rent or travel expenses in case of scrutiny.
4. Can I file ITR U if I forgot to claim HRA under the new tax regime?
No, HRA and LTA exemptions are available only under the old tax regime.
5. What is the penalty for incorrect ITR U filing?
If incorrect details are provided, the IT Department may issue a notice, leading to penalties under Section 270A.
6. Can ITR U be filed multiple times for the same year?
No, ITR U can be filed only once per assessment year.
7. What if my updated return results in a refund?
ITR U cannot be used for refund claims; it is meant for correcting underreported income.
8. How long does it take for an ITR U to be processed?
Processing typically takes 2-6 months, depending on IT Department verification.
9. Do I need to submit physical copies of documents after filing ITR U?
No, but retain digital copies of rent receipts and travel tickets for future verification.
10. Can I file ITR U for previous financial years?
Yes, ITR U can be filed for two financial years before the current assessment year.
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