All you need to know about filing updated income-tax returns

In Finance Bill 2022, two new sections (Sec 139(8A) and Sec 140B) are proposed to be inserted for filing of updated return and payment of tax while filing updated return under sub-section (8A) of Section 139 of the act.

Section 139(8A): Applicability

A New sub-section (8A) to section 139 is proposed to be inserted to provide an option to taxpayers for filing an updated return of income by any person, whether he has filed return of income for relevant assessment year or not under sub-section (1) or sub-section (4) or sub-section (5) of section 139, within twenty-four months from the end of the relevant assessment year.

Non-Applicability of Section 139(8A):

Provisions of proposed sub-section (8A) of section 139 shall not apply incase, updated return:

  • is a Return of Loss, or
  • has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1), subsection (4) or sub-section (5), or
  • results in refund, or
  • increases the refund due on 17 the basis of return furnished under sub-section (1), sub-section (4) or subsection (5)

Person not eligible to file updated return under section 139(8A)

Following person(s) shall not be eligible to file updated return under section 139(8A) if:

  • search has been initiated under section 132, or
  • books of account, other documents or any assets are requisitioned under section 132A in the case of such person, or
  • a survey has been conducted under section 133A, other than subsection (2A) of that section, in the case such person, or
  • a notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned under section 132 or section 132A in the case of any other person belongs to such person, or
  • a notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person.

Further, no updated return shall be furnished by any person for the relevant assessment year, where:

  • an updated return has been furnished by him under the proposed subsection (8A) of section 139 of the Act for the relevant assessment year, or
  • any proceeding for assessment or reassessment or re-computation or revision of income under the Act is pending or has been completed for the relevant assessment year in his case, or
  • the Assessing Officer has information in respect of such person for the relevant assessment year in his possession under the Prevention of Money Laundering Act, 2002 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or the Prohibition of Benami Property Transactions Act, 1988 or The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 and the same has been communicated to him, prior to the date of his filing of return under the proposed sub-section (8A) of section 139 of the Act, or
  • information for the relevant assessment has been received under an agreement referred to in sections 90 or 90A of the Act in respect of such person and the same has been communicated to him, prior to the date of his filing of return under the proposed sub-section (8A) of section 139 of the Act, or
  • any prosecution proceedings under Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of his filing of return under the proposed sub-section(8A) of section 139 of the Act, or
  • he is a person or belongs to a class of persons, as maybe notified by the Board in this regard.

Important Note: Return filed under section 139(8A) shall be treated as defective return under section 139(9) unless payment proof is provided while filing updated return as required under proposed section 140B.

Example: Mr. X failed to file his return of income for the previous year 2022-23 under sub-section (1) or sub-section (4 or sub-section (5) of sec 139. The assessment year for the current scenario is 2023-24. Thus, as per newly added provisions under sub-section (8A) of section 139, Mr. X can file updated return of income upto two years from the end of relevant assessment year i.e., he can file updated return upto 31st March 2026.

Example: Mr. X failed to file his return of income for the previous year 2022-23 under sub-section (1) or sub-section or sub-section (5) of sec For previous year 2022-23, he was eligible for refund of Rs 5,000. Later, in year 2024- 25 he wants to file his return to claim refund for year 2022-23. In this case, Mr. X cannot file updated return under section 139(8A). Since, updated return of income can only be filed along with proof of payment of tax and section 139(8A) shall not be applicable in the above case.

Section 140B: Tax Payment for opting to file return under section 139(8A)

Case 1: Where no return of income has been furnished earlier under sub-section (1) or sub-section (4) or sub- section (5) of sec 139

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. However, tax payable shall be computed after taking into account the following:

  • the amount of tax, if any, already paid as advance tax;
  • any tax deducted or collected at source;
  • any relief of tax claimed under section 89;
  • 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;
  • 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
  • any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD.

Case 2: Where return of income has been furnished earlier under sub-section (1) or sub-section (4) or sub- section (5) of sec 139

He, 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 of the Act, in the earlier return. However, tax payable shall be computed after taking into account the following:

  • 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;
  • 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;
  • 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;
  • 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;
  • 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.

Important Note: The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of such earlier return.

Example: Mr. X filed his return of income for previous year 2022-23 within time limit prescribed under sub-section (1) of section 139. As per return filed above, he received refund of Rs 6,500/- after processing of return. In Year 2024-25, he wants to file an updated return of income for previous year 2022-23 as per provisions of sec 139(8A) due to non-reporting of transactions or under-reporting of tax liability, tax on these undisclosed transaction amounts to Rs 50,000. Now, at the time of filing of updated return, refund received as per original return u/s 139(1) shall become payable along with liability under provisions of section 139(8A) and Section 140B.

Payment of Additional Tax under section 140B

Case 1: Where updated return is filed within 12 months from end of relevant assessment year:

Amount of additional income tax shall be equal to twenty-five per cent of aggregate of tax and interest payable.

Case 2: Where updated return is filed after 12 months but before completion of the period of twenty-four months from the end of the relevant assessment year:

Amount of additional income tax shall be equal to fifty per cent of aggregate of tax and interest payable.

Important Note: For the purposes of computation of “additional income-tax”, tax shall include surcharge and cess, by whatever name called, on such tax.

Example: Mr. X failed to file his return of income under sub-section (1) or (4) or (5) of section 139 for the previous year 2022-23. After end of assessment year 2023-24, he came to know about his tax liability for previous year 2022-23 which is 50,000/- and interest amount is 4,000/-

In the above case, Mr. X can file updated return for previous year 2022-23 upto 31st March 2026 i.e., within two years from the end of assessment year 2023-24 with payment of tax along with additional tax as per provisions of section 140B.

Amount of additional tax under section 140B:

Case 1: Where updated return is filed within 12 months from end of relevant assessment year:

Amount of additional income tax shall be equal to twenty-five per cent of aggregate of tax and interest payable.

Case 2: Where updated return is filed after 12 months but before completion of the period of twenty-four months from the end of the relevant assessment year:

Amount of additional income tax shall be equal to fifty per cent of aggregate of tax and interest payable.

Important Note: For the purposes of computation of “additional income-tax”, tax shall include surcharge and cess, by whatever name called, on such tax.

Example: Mr. X failed to file his return of income under sub-section (1) or (4) or (5) of section 139 for the previous year 2022-23. After end of assessment year 2023-24, he came to know about his tax liability for previous year 2022-23 which is 50,000/- and interest amount is 4,000/-

In the above case, Mr. X can file updated return for previous year 2022-23 upto 31st March 2026 i.e., within two years from the end of assessment year 2023-24 with payment of tax along with additional tax as per provisions of section 140B.

Amount of additional tax under section 140B:

If updated return filed upto 31st march 2025:

= 25% of (50,000 + 4,000)

= 13,500

If updated return filed after 31st march 2025 but upto 31st March 2026:

= 50% of (50,000 + 4,000)

= 27,000

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