Updated Return [Section 139(8A)] As per Budget, 2022
Hello Tax Loud Readers, we are here with another latest update on Income Tax which can help taxpayers to manage their taxes.
In Budget 2022, Government has introduced the new provisions vide Section 139(8A) of the Income Tax Act enabling the taxpayers to file the Updated Return subject to certain conditions which will come into effect from 01.04.2022.
Government in the belief that the taxpayers should give some additional time period to change the updated Return voluntarily which is likely reduce tax burden and tax compliances in future.
CBDT inserts Rule 12AC to notify the income tax return form (Form U) and manner for filing updated return u/s 139(8A) – Notification 48/2022 dated 29.04.2022.
When to File Updated Return?
An updated return can be filed by any taxpayer whether the original return or belated return or revised return was filed or not.
The taxpayer should file the updated Return in case of following situations:-
> An error or omission found in the original/Belated/Revised Return Filled.
> Such type of Error or Omission results into the additional Income and Additional tax liability.
> Taxpayer should file such return within 2 years from the end of such relevant assessment year.
An updated return shall be accompanied with the proof of payment of tax as required by section 140B.
When not to File Updated Return?
The taxpayer should not file the updated Return in case of following situations:-
> Increase in the claim of refund filed earlier.
> Decrease tax liability as declared earlier
> Increase the Loss as declared earlier
Whether filled updated return can be updated?
Taxpayers can file the updated return only once for an assessment year under this section. i.e. Updated return filled once can never be updated again.
Reasons for updated Return in “Form U”
While filing Form U, the taxpayers need to provide the exact reason for updating the income.
The following are reasons which are required to be selected by the assessee.
> Income not reported correctly in filled return
> Return previously not filed
> Income not reported correctly
> Wrong heads of income chosen
> Reduction of carry forward loss
> Reduction of unabsorbed depreciation
> Reduction of tax credit u/s 115JB/115JC
> Wrong rate of tax
> Others
Which taxpayers are not eligible to file updated Return u/s 139(8A)?
Following taxpayers (assessee) will not be eligible to file an updated return for the assessment year
> Survey has been conducted for that assessment year u/s 133A.
Note: Assessee will be eligible to file an updated return if the survey for checking TDS/TDS compliance u/s 133A(2A) has been conducted for that assessment year.
> Search has been conducted for that assessment year u/s 132.
> Books of Account or Assets are requisitioned and notice has been issued for that assessment year u/s 132A or 132.
> Proceeding for assessment or reassessment or revision of income is pending or has been completed for that assessment year.
> Prosecution proceedings under Chapter XXII have been initiated for that assessment year.
> Proceedings are pending or information received under an agreement referred u/s 90 or 90A in respect of the assessee and the same has been communicated to the assessee.
> Assessing Officer (AO) is in the receipt of the material and relevant information under the Prevention of Money-laundering Act, 2002 (PMLA) or Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or Prohibition of Benami Property Transactions Act, 1988 or Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The Same has been communicated to the assessee.
Benefits of filling an updated Return u/s 139(8A)
Following are some benefits (merits) of filling an updated Return: –
> Reduce the tax burden compliances, penalties, proceedings and litigation which might arise otherwise.
> Tax including interest is likely to be less as compared to the Proceedings, Litigations etc.
> Updated return can be filed in the extended time period of 24 months.
Time limit to file an updated Return u/s 139(8A)
An updated return u/s 139(8A) can be filed within twenty-four (24) months from the end of the relevant assessment year.
For Example:-
For FY 2020-21, the updated return can be filed on or before 31st March, 2024 (Within 24 Months from the end of the assessment year 2021-22)
It is noted that the time limit to file the income tax return u/s 139(1) or revised income tax return u/s 139(4) or belated income tax return u/s 139(5) should have lapsed.
Additional tax payable while filling the updated return
In Budget 2022, a new section 140B has been inserted along with section 139(8A) which provides the provisions of additional tax payable in case an updated return.
If updated Return is filled
> within 12 months from the end of the relevant assessment year then the additional tax/ penalty is 25% of the aggregate of such computed tax and interest.
> After the expiry of 12 months but within the expiry of 24 months from the end of relevant assessment year then the additional tax/ penalty is 50% of the aggregate of such computed tax and interest.
Format for computation of tax payable under updated Return
| Particulars | Amount in |
| Tax on Total Income | xxxxxxx |
| Less: Tax Deducted at Source (TDS) | (xxxx) |
| Less: Tax Collected at Source (TCS) | (xxxx) |
| Less: Advance Tax | (xxxx) |
| Less: Self-Assessment Tax | (xxxx) |
| Less: Tax credit u/s 115JAA/115JD | (xxxx) |
| Less: Relief u/s 89/90/90A/91 (if applicable) | (xxxx) |
| Net Tax Payable | xxxxx |
| Add: 25%/50% additional tax payable u/s 140B | xxxx |
| Total Tax Payable including additional tax | xxxxx |
Note:
Figures of tax include the interest, cess, and surcharge (if applicable). Penalty u/s 234F will be applicable only if Return u/s 139(1) was not furnished.
Conclusion: The introduction of Section 139(8A) represents a progressive step towards enhancing tax compliance flexibility and fairness. By allowing taxpayers to correct their returns within a generous timeframe, the government acknowledges the complexities of tax filing and the potential for honest mistakes. This provision not only facilitates easier corrections but also underscores the importance of responsible tax filing practices. Taxpayers are encouraged to leverage this opportunity wisely, ensuring their tax affairs are in order while minimizing potential penalties and interest.
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