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Finance minister, in her budget 2022 speech, had announced about the provision of filing updated tax return. This will provide taxpayers the opportunity to correct an error or report any income that was missed in the original return. Let’s discuss more on the newly inserted sub-section 8(A) in section 139 for furnishing the updated income tax return and also discuss a few already existing concepts such as original return, revised return and belated return.
Table of Contents
Any person who has furnished original return of income under sub-section (1) or has furnished a belated return under sub-section (4) or furnished a revised return can now furnish an updated return in case there was any omission or wrong statement in the return filed earlier.
If the person has not furnished his income return, the person can furnish an updated return under the newly inserted sub-section 8(A) of Section 139 of the Act. This will allow a person to update its revised return and belated return even after the end of the relevant assessment year. The newly proposed sub-section 8(A) will apply to all person.
In the following cases, updated return can’t be filed:
In all these cases, sub-section 8(A) of Section 139 shall not apply.
The updated return can be furnished within 24 months from the end of the relevant assessment year.
Example: For FY 2021-22, the assessment year ends on 31 March 2023. Thus, Updated Return may be furnished by the assessee up to 31 March 2025.
According to Section 140B of the Act, an assessee must pay additional tax and submit the proof of tax payment along with updated return of income.
In this, two situations may arise. One is where the person has furnished the return of income under section 139(1), section 139(4), or 139(5) of the Act or where the return of income has not been furnished.
If the assessee has furnished return of income under sub-sections (1), (4), or (5) of section 139, then he will be liable to pay the tax due with the interest and fee payable for delay in furnishing return of income or any default or delay in the advance tax payment along with the additional tax payment as reduced by the amount of interest paid in the earlier return.
The tax payable will be calculated after considering:
If the assessee hasn’t furnished return of income, then he will be liable to pay the tax due with the interest and fee payable for delay in furnishing the return of income or any default or delay in the advance tax payment along with the additional tax payment as reduced by the interest amount paid in the earlier return.
It may be noted that additional tax will be 25% of the aggregate of tax and interest to be paid in updated return, in case where the updated return is furnished after exhausting the time limit of filing revised or belated return but before the end of 12 months from the end of the relevant AY.
Further additional tax will be 50% of the aggregate of tax and interest payable in Updated Return, in case where the Updated Return is furnished after the 12 month period from the end of the relevant AY but before the end of 24 months from the end of the relevant Assessment Year.
Experts believe that giving taxpayers the opportunity to file updated income tax return to report any erroneously missed out income or to correct errors is a much-awaited tax reform. The previous timeline for updating income tax return was 3 months from the end of relevant AY.
Read our Article:Income Tax Refunds for AY 2021-22: 1.5 Crore Refunds Issued
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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