Updated Return

Missed The Due Date For Filing your Income Tax Return?

Every year we come across several taxpayers who fail to submit their Income Tax returns within the designated timeframe or unintentionally omit reporting certain taxable income when filing their returns. Such situations can result in receiving notices from the Income Tax Authorities and encountering various related complications.

Now, what is the solution? 

To address this issue, the Finance Act 2022 has introduced a new provision, Section 139(8A), into the Income Tax Act. This section came into effect on April 1, 2022. When combined with Rule 12AC of the Income Tax Rules, Section 139(8A) offers an opportunity to submit a new return in situations where no return was previously filed or when an updated return needs to be filed. 

The CBDT vide Notification No. 48/2022, dated 29-04-2022, had notified Form ITR-U, which has to be filed with the respective ITR, to furnish an updated return. 

Who can avail this option?

Every taxpayer is entitled to file an updated return, which can be done in the following circumstances;

1. No return was filed previously.
2. Income was not reported accurately.
3. Income was reported under incorrect heads.
4. Leads to a reduction in carry-forward loss. 
5. Results in a reduction of unabsorbed depreciation.
6. An incorrect rate of tax was applied. 
7. Leads to a reduction in tax credits. 

However, such a return cannot be filed in the following circumstances

1. An updated return is a return of a loss;
2. Updated return results in lower tax liability;
3. Updated return results in or increase in the refund;
4. In case of a search initiated against the assessee;
5. Where books of account or assets etc. are requisitioned from the assessee;
6. In case a survey is conducted against the assessee;
7. Where documents or assets seized or requisitioned in case of any other person belonging to the assessee;
8. In case an updated return has already been filed;
9. In case the assessment is pending or completed;
10. In case AO has information about the assessee under specified Acts;
11. In case AO has information about the assessee under DTAA or TIEA;
12. In case any prosecution proceeding is initiated; or
13. In the case of a person or class of persons as notified by the CBDT.

Is there a time limit to Time Limit to File Updated Return?

The time limit to file an updated return is 24 months from the end of the relevant assessment year.

Is there any additional tax liability?

If the return is filed within 12 months from the conclusion of the relevant assessment year, the additional tax will be 25%. However, if the return is filed between 12 months and 24 months, the tax rate will be 50%. It is important to note that interest is applicable on the additional tax payable in both cases.