Introduction
Hon’ble Finance Minister Nirmala Sitharaman has presented her fourth Budget on 01 Feb 2022. The budget proposes a new new set of return concepts known as “Updated Return.”
There have been three versions so far:
-Original Return,
-Revised Return, and
-Belated Return,
Finance Bill 2022 has introduced new concept of “Updated Return.”
Budget proposes to add a new sub-section (8A) to section 139 to provide for the filing of amended returns under the new provisions.
New Provision for Updating ITR [AY 2022-23]
The due date for filling ITR u/s 139(1) of the Act is 31st July, 31st October and 30th November for various types of assessee. The due date for filling revised return u/s 139(5) is 31st December of the relevant assessment year or before the completion of assessment, whichever is earlier. Similarly, the due date for filling belated return u/s 139 (4) is also 31st December of the relevant assessment year or before the completion of assessment, whichever is earlier.
In order to provide more time to tax payers, it is proposed to introduce a new provision in section 139(8A) of the Act for filing an updated return of income by any person, whether he has filed a return previously for the relevant assessment year, or not. The proposal for updated return over a period longer than that is provided in the existing provisions of Income-tax Act would on the one hand bring use of huge data with the IT Department to a logical conclusion resulting in additional revenue realization and on the other hand, it will facilitate ease of compliance to the taxpayer in a litigation free environment.
Any person may furnish an updated return of his income or the income of any other person in respect of which he is assessable under the Act for the P. Y. relevant to such A. Y., within 24 months from the end of the A. Y. with additional tax. Such return shall be furnished in the prescribed form and manner and shall contain prescribed particulars.
Cases in which Updated return cannot be filed
- If updated return already filed for the same AY.
- If assessment/reassessment/revision/re-computation is pending or has been completed for the same AY.
- Where search has been initiated or survey has been conducted for the relevant AY or two years preceding the relevant AY.
- Information available with the AO under specified laws or on account of India’s tax treaty agreements and the same has been communicated to the taxpayer prior to filing the updated return.
- Prosecution proceedings have been initiated prior to filing of updated return.
- Such person as may be notified
A new section 140B has been proposed to provide for the tax required to be paid for opting to file a return under the proposed provisions i.e. sub-section (8A) of section 139 of the Act
I) Where no return furnished earlier:
where no return of income under sub-section (1) or sub-section (4) of section 139 has been furnished by an assessee, he shall before furnishing the return under sub-section (8A) of section 139, be liable to pay the tax due together with interest and fee payable under any provision of the Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional tax. The tax payable shall be computed after taking into account the following:-
(i) the amount of tax, if any, already paid as advance tax;
(ii) any tax deducted or collected at source;
(iii) any relief of tax claimed under section 89;
(iv) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India;
(v) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and
(vi) any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD.
Such updated return shall also be accompanied by proof of payment of such tax, additional tax, interest and fee.
II) Where return has been furnished earlier
In the case of an assessee, where, return of income under sub-section (1) or sub-section (4) or sub-section (5) of section 139 (referred to as earlier return) has been furnished by an assessee, he shall before furnishing the return under sub-section (8A) of section 139, be liable to pay the tax due together with interest and fee payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, along with the payment of additional tax, as reduced by the amount of interest paid under the provisions o the Act in the earlier return,. The tax payable shall be computed after taking into account the following:-
(i) the amount of relief or tax, referred to in sub-section (1) of section 140A, the credit for which has been taken in the earlier return;
(ii) tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing total income and which has not been claimed in the earlier return;
(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India on such income which has not been claimed in the earlier return;
(iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section on such income which has not been claimed in the earlier return;
(v) any tax credit claimed, to be set off in accordance with the provisions of section 115JAA or section 115JD, which has not been claimed in the earlier return.
The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of such earlier return.
The updated return, furnished under sub-section (8A) of section 139, shall be accompanied by proof of payment of such tax, additional tax, interest and fee.
(III) The additional tax, payable at the time of furnishing the return under sub-section (8A) of section 139,
It is also clarified that for the purposes of computation of “additional income-tax”, tax shall include surcharge and cess, by whatever name called, on such tax.
IV) It is further provided that notwithstanding anything contained in the Explanation 1 to section 234B, in the cases where an earlier return has been furnished, interest payable under section 234B shall be computed on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid falls short of the assessed tax, where, “assessed tax” means the tax on the total income as declared in the return to be furnished under sub-section (8A) of section 139, after taking into account the following:
(i) the amount of relief or tax, referred to in sub-section (1) of section 140A, the credit for which has been taken in the earlier return;
(ii) tax deducted or collected at source, in accordance with the provisions of Chapter XVII-B, on any income which is subject to such deduction or collection and which is taken into account in computing such total income and which has not been claimed in the earlier return;
(iii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India on such income which has not been claimed in the earlier return;
(iv) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section on such income which has not been claimed in the earlier return;
(v) any tax credit claimed, to be set off in accordance with the provisions of section 115JAA or section 115JD, which has not been claimed in the earlier return. The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of such earlier return.
V. where no earlier return has been furnished, the interest payable under section 234A shall be computed on the amount of the tax on the total income as declared in the return under sub-section (8A) of section 139. Further, interest payable under section 234C, where an earlier return has not been furnished, shall be computed after taking into account the income furnished in the return under sub-section (8A) of section 139 as the returned income. At the same time, for the computation of additional tax above, the interest payable shall be interest chargeable under any provision of the Income-tax Act, on the income as per return furnished under sub-section (8A) of section 139, as reduced by interest paid in the earlier return, if any. However, the interest paid in the earlier return shall be considered to be nil if no earlier return has been furnished.
VI. In view of the proposed sub-section (8A) of section 139 and new section 140B, consequential amendments in section 144, section 153, section 234A and section 234B and 276CC have also been made.
Effective Date
These amendments will take effect from 1st April, 2022.
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