Updated return: Section 139(8A) of Income tax Act-1961

Updated Return

In the Union Budget 2022, Union Finance Minister Smt. Nirmala Sitharaman Ji introduced a new concept of Income Tax Return i.e. Updated Return as a step towards encouraging voluntary compliance. At present, if the IT department finds that some income has been omitted by the assessee, it goes through a lengthy process of adjudication, and the new proposal will re-establish trust in the taxpayer. In this article, we will discuss the following aspects of this new version of Income tax return:

  1.  Idea behind this new Updated Return
  2. Time limit for filing Updated Return
  3. Conditions related to filing of Updated Return
  4. Computation of Income tax for Updated Return
  5. Additional tax liability
  6.  Difference between Updated Return and Revised Return
  1. Idea behind this new updated return:

The government introduced a new section, Section 139(8A) i.e. the concept of Updated Return in income tax in the Union Budget 2022. Presently, a taxpayer who is failing to file the original return within a specified time frame can file the Belated Return. Additionally, a taxpayer is also allowed to revise their original/belated return and rectify errors or omission made earlier. By introduction of this new concept error or omission can be rectified by filling an Updated Return irrespective of the fact whether the original return was filed by the taxpayer or not. The option of filling an Updated Return is granted to those taxpayers who wish to declare their income voluntarily and who missed to file their Original or Belated Return.

  1. Time Limit for filling Updated Return:

An Updated Return can be filed by the taxpayer within 24 months from the end of the relevant Assessment Year. The option of filing the Updated Return will be available to the taxpayers, irrespective of whether they have earlier filed Original Return or not. For e.g. If a taxpayer failed to file the Original Return for the Assessment Year 2022-2023 upto the return filling date and also he/she failed to file the Belated Return as well in such case an Updated Return can be filed upto 31-03-2025 i.e 24 months from the end of relevant Assessment Year.

  1. Conditions and Other Provisions related to filling of Updated Return:
  • Updated Return can be filed through Form ITR-U.
  •  Provision of Updated Return becomes effective from 1st April 2022.
  •  An Updated Return cannot be filed if the same is a return of loss.
  • An Updated Return cannot be filed if the same results in a refund or increase the refund or decrease the total tax liability determined in earlier return.
  •  Updated returns can be filed only once for a particular Assessment Year.
  • No Updated return can be filed in cases where certain search and survey proceedings have already been initiated.
  • Any Assessment or reassessment proceeding is pending or has been completed for the relevant year.
  • The AO has information against such person under the Prevention of Money Laundering Act or Black Money (Undisclosed Foreign Income and Assets) and Tax Act or Benami Property Transactions Act or Smugglers and Foreign Exchange Manipulation Act and the same have been reported to the assessee.
  1. Computation of Income Tax for Updated Return:

As per Section 140B of Income Tax 1961, income tax liability for updated return will be calculated as follows;

Tax Payable as per original ITRxxxxx
Add: Interestxxxxx 
Add: Additional Tax(Computed as per Point 5)xxxxx
Total Tax Liabilityxxxxx
Less: TDS/TCS/Advance tax/Tax Relief etc.xxxxx
Net Tax Liability under section 140Bxxxxx
  1. Additional Tax Liability:

To avail the benefit of section 139(8A), the assesse is required to pay additional tax computed as under:

  1. If return filed within 12 Months from the end of the assessment year: 25% of aggregate tax, HEC, SC, and Interest 
  2. If return filed within24 Months from the end of the assessment year: 50% of aggregate tax, HEC, SC, and Interest.

       6.    Difference between Revised Return and Updated Return:

Updated ReturnRevised Return
Updated return can be filed even if no original return has been filedRevised return can’t be filed without filling of original return
Updated return can be filed only when there is addition in tax liability.There is no restriction for revised return
Additional tax is to be payable by the taxpayer.There is no clause for additional tax liability.
A taxpayer cannot claim refund through Revised returnRefund of Income tax can be claimed through Revised return 
A New Form’ ITR-U’ has to be filed in case of Updated returnRevised return is filed through original form of return i.e ITR-1, ITR-2, ITR-4 etc.
Updated return can be filed only once for a particular yearA taxpayer can file multiple revised returns for the same AY.

        7.   Conclusion:

Under the IT Law penalty ranging from 50% to 200% of the tax amount can be imposed in case of under-reporting or misreporting of income. Further, failure to furnish a return may also attract fines and prosecution, which can result in imprisonment extending upto seven years.

Therefore, a taxpayer, who opts to file the Updated Return and disclose additional income, can eliminate aforesaid penal consequences.

CA Desk is a team of highly professional CA, CS, Lawyers who driving towards the integration of technology with traditional practices to cater to the need of MSMEs in the fast-moving and cost-effective world.

Sign Up for Weekly Digest

Get Latest Updates Right In Your Mailbox
No, thanks
Sign Up for Weekly Digest