Up-dated return under Income tax- Eligibility and Procedure

The Finance Act 2022 has inserted subsection (8A) in section 139 to enable the filing of an updated return. The section provides that an updated return can be filed by any person irrespective of the fact whether such person has already filed the original, belated or revised return for the relevant assessment year or not.

An amount equal to 25% or 50% as additional tax is required to be paid with such updated return.

The additional tax shall be equal to 25% of the aggregate of tax and interest payable by a person on the filing of the updated return where such return is furnished after the expiry of the due date of filing of belated or revised return but before completion of a period of 12 months from the end of the relevant assessment year.

Where the updated return is furnished after the expiry of 12 months from the end of the relevant assessment year but before completion of the period of 24 months from the end of the relevant assessment year, the additional tax payable shall be 50% of the aggregate of tax and interest payable.

Here it is to be noted that for computation of "additional income-tax", tax shall include surcharge and cess. Further, for the computation of additional tax, the amount of interest payable shall be reduced by the amount of interest paid in accordance with the earlier return.

What is an updated return?

An updated return is a type of tax return that allows taxpayers to file their returns with more time. It is intended to encourage voluntary tax compliance. An updated return can be filed by any person, except in certain circumstances, regardless of whether they have previously filed an original, belated, or revised return for the relevant assessment year. The filing of an updated return is optional for the taxpayer.

An updated return is a type of tax return that allows taxpayers to file their returns with more time. It is intended to encourage voluntary tax compliance. An updated return can be filed by any person, except in certain circumstances, regardless of whether they have previously filed an original, belated, or revised return for the relevant assessment year. The filing of an updated return is optional for the taxpayer.

When can an updated return be filed?

The time limit for filing of updated return an updated return may be filed by any person in any case, except under certain circumstances. A person may file an updated return of his income or the income of any other person in respect of which he is assessable under the Income-tax Act, such as in a representative capacity or in case of clubbing of income.

A person can file an updated return even if he has furnished a return of loss under section 139(3) earlier for the relevant assessment year, but the updated return should not be a return of loss.

The time limit for filing of updated return

The provision of updated returns is effective from 01-04-2022, and the time limit provided for filing an updated return is 24 months from the end of the relevant assessment year.

 In the financial year 2024-25, a person can file an updated return for AY 2022-23 and AY 2023-24.

Form for filing an updated return

As per Rule 12AC of Income Tax Rules, the return of income to be furnished by any person, eligible to file such return under the sub-section (8A) of section 139, relating to the assessment year commencing on the 1st day of April, 2020 and subsequent assessment years, shall be in the Form ITR-U and be verified in the manner indicated therein.

An updated return shall be filed in the relevant ITR Form as applicable to the taxpayer. The taxpayer will be required to fill the Schedule 'Part A Gen_139(8A)' and Schedule 'Part B ATI' of the relevant form to file an updated return.

Manner of furnishing of an updated return

An updated return shall be filed electronically under Digital Signature Certificate (DSC) in case of the following taxpayers: (a) Company (b) Political Party (c) Any person whose accounts are required to be audited under Section 44AB of the Income-tax Act except person filing return in ITR-7. For other taxpayers, the updated return shall be filed electronically either under Digital Signature Certificate or under Electronic Verification Code (EVC).

Reporting in ITR while filing an updated return

When a person is filing an updated return, he is required to provide certain details in the relevant ITR forms. These forms include Schedule 'Part A Gen_139(8A)' and 'Part B ATI'. The details that need to be provided include:

• Basic details i.e. PAN, Name, and Aadhaar Number

• Details of earlier return, if filed i.e. section, ITR form, acknowledgment number, and date of filing of the previous return

• Eligibility of filing an updated return

• Relevant ITR form selected for updated return

• Reasons for filing the updated return

• Time of filing of updated return - The person needs to specify whether the updated return is being filed within 12 months or between 12 to 24 months from the end of the assessment year

• Whether filing of updated return result in the reduction of carried forward loss, unabsorbed depreciation, or tax credit? If yes, then the person needs to select the affected assessment years and whether the revised or updated return is filed for such years.

• Head-wise reporting of additional income as shown in the updated return and computation of tax payable on the updated return

• Details of payments of tax on updated return

• Details of advance tax, self-assessment tax, and regular assessment tax paid, the credit of which has not been claimed in the earlier return

• Relief under section 89 which was not claimed in the earlier return

Who can file updated return—

• Any person who has made an error or omitted certain income details in its original, belated or revised return is eligible to file an updated return;

• Where wrong rate of tax has been applied or wrong head of income has been selected; 

• A person who has not filed its return previously; 

• For reduction of carried forward losses or unabsorbed depreciation

• For reduction of tax credit u/s 115JB & 115JC; 

When an updated return cannot be filed?

1. If an updated return is a return of loss— An updated return cannot be filed if it reflects total income as a loss. However, there is no prohibition on filing an updated return if there is a loss under any head of income but the total income is positive.

2. If an updated return results in lower tax liability— An updated return cannot be filed if it decreases the total tax liability determined based on an earlier return.

3. If an updated return results in or increase in the refund— An updated return cannot be filed if it results in a refund or increases the refund previously due on the basis of an earlier return.

4. If a search is initiated against the assesse— An updated return cannot be filed for the assessment year relevant to the previous year in which a search is initiated under section 132 and for any assessment year preceding such assessment year.

5. If books of account or other documents or any assets are requisitioned— An updated return cannot be filed for the assessment year relevant to the previous year in which requisition is made under section 132A and for any assessment year preceding such assessment year.

6. If a survey conducted against the assesse—An updated return cannot be filed for the assessment year relevant to the previous year in which the survey is conducted under section 133A and for any assessment year preceding such assessment year. However, this provision does not restrict the assessee from filing an updated return where the survey is conducted in connection to TDS or TCS.

7. If documents or assets are seized or requisitioned in case of any other person belonging to the assesse—A person shall not be eligible to file an updated return if a notice has been issued to him 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 belonging to him; or

• any books of account or documents, seized or requisitioned under section 132 or section 132A in the case of any other person, pertaining to, or any other information contained therein, related to him.

8. If the updated return has already been filed—An updated return cannot be revised as it can be filed only once for any particular assessment year.

9. If the assessment is pending or completed— An assessee shall not be eligible to file an updated return of the year of which assessment or reassessment or recomputation or revision is pending or has been completed.

10. If AO has information about the assessee under specified Acts—A person cannot file an updated return for any assessment year if the Assessing Officer (AO) has information in respect of him for that year under the following Acts, and the same has been communicated to him before the filing of the updated return:

• Prevention of Money Laundering Act, 2002;

• The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;

• The Prohibition of Benami Property Transactions Act, 1988; or 

• The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.

11. If AO has information about the assessee under DTAA or TIEA— Where any information is received under Double Taxation Avoidance Agreement (DTAA) or Tax Information Exchange Agreement (TIEA) in respect of a person for the relevant assessment year, he shall not be eligible to file an updated return for that year provided the same has been communicated to him before the filing of updated return.

12. If any prosecution proceeding is initiated—Where any prosecution proceedings have been initiated against the person for the relevant assessment year, he shall not be eligible to file an updated return for such year.

13. In other notified cases—A person or class of persons as notified by the Central Board of Direct Taxes (CBDT) shall not be eligible to file the updated return.

Curative Updated Return of Subsequent Years—When a person files an updated return for a previous year, and as a result, the amount of the following is reduced for any subsequent year, the person shall be required to file an updated return for each subsequent year:

• Carried Forward Losses; or

• Carried Forward Unabsorbed Depreciation; or

• MAT Credit; or

• AMT Credit

This is to ensure that the correct amount of losses are carried forward and can be used to offset future income.

Tax on updated return— The provisions of section 140B provide for payment and computation of tax, interest, fee, and additional income tax on updated returns. The updated return shall be accompanied by the proof of tax payment, i.e., normal tax (if any), additional tax, interest, and fee as required under section 140B otherwise it shall be treated as a defective return.