Finance Bill, 2025 proposes to amend Section 139 of the Income Tax Act to extend the time limit for filing an updated return from 24 months to 48 months from the end of the relevant assessment year. Under this new provision, if an updated return is filed after 24 months but within 36 months, an additional tax of 60% of the tax and interest payable will apply. For returns filed after 36 months but within 48 months, the additional tax will increase to 70%. Additionally, no updated return can be filed if a notice under Section 148A has been issued after 36 months, unless an order is passed stating it is not fit to issue a notice under Section 148. These amendments will be effective from April 1, 2025.
Budget 2025: Extending the time-limit to file the updated return
Sub-section (8A) of section 139 of the Act, relates to furnishing of updated return. As per the present provisions, an updated return can be filed upto 24 months from the end of the relevant assessment year. The facility of updated return has promoted voluntary compliance against payment of additional income-tax of 25% of aggregate of tax and interest payable for updated return filed upto 12 months from the end of the relevant assessment year. For updated return filed after expiry of 12 months and upto 24 months from the end of the relevant assessment year, the additional income-tax of 50% of aggregate of tax and interest is to be paid.
2. With a view to further nudging voluntary compliance, it is proposed to amend the said subsection so as to extend the time-limit to file the updated return from existing 24 months to 48 months from the end of relevant assessment year. Rate of additional income-tax payable for updated return filed after expiry of 24 months and upto 36 months from the end of the relevant assessment year shall be 60% of aggregate of tax and interest payable. The additional income-tax payable for updated return filed after expiry of 36 months and upto 48 months from the end of the relevant assessment year shall be 70% of aggregate of tax and interest payable.
3. It is further proposed to provide that no updated return shall be furnished by any person where any notice to show-cause under section 148A of the Act has been issued in his case after thirty-six months from the end of the relevant assessment year. However, where subsequently an order is passed under sub-section (3) of section 148A of the Act determining that it is not a fit case to issue notice under section 148 of the Act, updated return may be filed upto 48 months from the end of the relevant assessment year.
4. These amendments will take effect from the 1st day of April, 2025.
[Clauses 39 & 40]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 39 of the Bill seeks to amend section 139 of the Income-tax Act, relating to return of income.
The said section provides the provisions for filing of income-tax return by taxpayers. The said section provides guidelines for filing of original return under sub-section (1), filing of belated or revised returns, the class or classes of persons who have an obligation to compulsorily file a return, rectification of a defective return, the due dates for filing of the said returns etc.
Sub-section (8A) of the said section provides that any person, whether or not he has furnished an original return, belated return or revised return under sub-section (1) or (4) or (5), for an assessment year, may furnish an updated return of his income or income of any other person in respect of which he is assessable under this Act, within 24 months from the end of the relevant assessment year.
It is proposed to amend sub-section (8A) of the said section so as to extend the time-limit to file an updated return from twenty-four months to forty-eight months from the end of relevant assessment year.
It is further proposed to insert a proviso in sub-section (8A) so as to provide that no updated return shall be furnished by any person where any notice to show-cause under section 148A has been issued in his case after thirty-six months from the end of the relevant assessment year. However, where an order is passed under sub-section (3) of section 148A determining that it is not a fit case to issue notice under section 148, updated return may be filed upto 48 months from the end of the relevant assessment year.
These amendments will take effect from 1st April, 2025.
Clause 40 of the Bill seeks to amend section 140B of the Income-tax Act relating to tax on updated return.
Sub-section (3) of the said section provides the computation of additional income-tax payable for the purposes of updated return. It, inter alia, provides that 25% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return upto twelve months from the end of the relevant assessment year. However, 50% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of twelve months from the end of the relevant assessment year but before completion of twenty-four months from the end of the relevant assessment year.
It is proposed to amend the said sub-section prescribing additional income-tax on updated return by inserting clauses (iii) and (iv) so as to provide that 60% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of twenty-four months from the end of the relevant assessment year but before completion of thirty-six months from the end of the relevant assessment year. Further, 70% of aggregate of tax and interest payable shall be the additional income-tax payable in the case of filing updated return after expiry of thirty-six months from the end of the relevant assessment year but before completion of forty-eight months from the end of the relevant assessment year.
This amendment will take effect from 1st April, 2025.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
39. Amendment of section 139.
In section 139 of the Income-tax Act, in sub-section (8A),––
(a) for the words “twenty-four months”, the words “forty-eight months” shall be substituted;
(b) after the third proviso, the following provisos shall be inserted, namely:––
“Provided also that no updated return shall be furnished by any person where any notice to show-cause under section 148A has been issued in his case after thirty-six months from the end of the relevant assessment year:
Provided also that the fourth proviso shall not apply where an order is passed under sub-section (3) of section 148A determining that it is not a fit case to issue notice under section 148.”.
40. Amendment of section 140B.
In section 140B of the Income-tax Act, in sub-section (3), after clause (ii), the following clauses shall be inserted, namely:–
“(iii) sixty per cent. of aggregate of tax and interest payable, as determined in sub-section (1) or sub-section (2), as the case may be, if such return is furnished after the expiry of twenty-four months from the end of the relevant assessment year but before completion of the period of thirty-six months from the end of the relevant assessment year; or
(iv) seventy per cent. of aggregate of tax and interest payable, as determined in sub-section (1) or sub-section (2), as the case may be, if such return is furnished after the expiry of thirty-six months from the end of the relevant assessment year but before completion of the period of forty-eight months from the end of the relevant assessment year.”.
