Additional Tax under section 140B

A new section 140B has been proposed in the Union Budget,2022. If an assessee opts for filing the return under newly proposed section 139(8A), an additional tax is required to be paid under Section 140B.

Method of Computation of Tax

Situation 1- Where no Return of Income was Furnished Earlier

Where no return of income was furnished earlier under section 139(1) or 139(4), he shall be liable to pay the tax inclusive of interest and fee payable under the provisions of the Income Tax Act for any delay in furnishing the return of income or for default or delay in payment of advance tax along with the payment of additional tax. The tax payable shall be computed after taking the following into consideration-

1. The amount of advance tax paid
2. Any TDS or TCS
3. Any relief of tax claimed under section 89
4. Any relief of tax or deduction of tax claimed under section 90 or 91 on account of taxes paid in a country outside India.
5. Any relief of tax or deduction of tax claimed under section 90A on account of taxes paid in a Specified Territory outside India.
6. Any Tax Credit claimed to be set off in accordance with the provisions of section 115JAA or Section 115JD

The return of income shall also be accompanied with the proof payment of such tax, additional tax, interest and fee.

Situation 2- Where Return of Income was Furnished Earlier

Where return of income was furnished under section 139(1) or 139(4), he shall before furnishing the return under section 139(8A), be liable to pay the tax inclusive of interest and fee payable under the provisions of the Income Tax Act for any delay in furnishing the return of income or for 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. The tax payable shall be computed after taking the following into consideration-

1. The amount of relief or tax, referred to in 140A(1), the credit for which has been claimed in the earlier return.
2. Any TDS or TCS, 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 the total income and which has not been claimed in the earlier return.
3. Any relief of tax or deduction of tax claimed under section 90 or 91 on account of taxes paid in a country outside India which has not been claimed in the earlier return.
4. Any relief of tax or deduction of tax claimed under section 90A on account of taxes paid in a Specified Territory outside India which has not been claimed in the earlier return.
5. 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.

The aforesaid tax shall be increased by the amount of refund issued in respect of such earlier return.

The updated return of income filed under section 139(8A) shall also be accompanied with the proof payment of such tax, additional tax, interest and fee.

Rate of Additional Tax

If the return of income under section 139(8A) is filed before 12 months from the end of relevant assessment year, the additional tax payable shall be equal to 25% of aggregate of tax and interest payable.

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

Further, in view of the insertion of section 140B, section 234A and 234B under which the interests are levied have also been amended.