Updated Return - Opportunity to file tax return even after prescribed time limit

Introduction

We all know how the consequences are severe if once misses the filing their tax return within the time limit. There was no option to file tax return after the time limit and only possible way is that it will be litigated. Both Tax department and tax payers to suffer from the non compliance. Tax payers to pay to hefty penalties, interest and tax department has to go through administration challenges for that litigation, not a win-win situation for taxpayers and tax department.

In this backdrop, government has come up with a proposal in Budget 2022 to give an opportunity to tax payers to file the tax return or correct the details in earlier filed tax returns, even after time limit prescribed. It is called as "UPDATED RETURN".

With the Introduction of "Updated Return", tax department aimed to reduce the potential litigations that arise due to non filing of ITR or inaccurate ITR's. And, Helps the taxpayers to rectify the discrepancies in filed tax returns.

Now, let us, deep dive, into the what, when, how and who of the Updated Return.

Background

• Section 139(8A) has been inserted through Finance Act, 2022.
• Rule 12AC has been inserted to provide Form-U to file the updated Return u/s 139(8A).
• Which came into effect from 01-04-2022.

What is Updated Return?

Section 139(8A)- Provides the taxpayer an additional time limit to file an updated return even after existing prescribed time limits, Where the Taxpayer fails to file the ITR within the due dates or files inaccurate ITR.

When can Updated Return be filed?

Updated Return can be filed after the end of the relevant assessment year to 24 months thereafter.

How much additional taxes are mandatory to be Paid for filing Updated Return?

If taxpayer is wish to file Updated Return and there is increase in tax liability, in such cases tax payers has to pay additional tax liability as below.

Section 140B deals with additional taxes to be paid for filing Updated Return.

Note: If an ITR has not been filed u/s 139(1), then additional fees of Rs.5,000 shall be levied.

Updated Return cannot be filed in below cases

• Return of a loss.
• Has the effect of decreasing the total tax liability determined on the basis of return furnished.
• Results in refund or increases the refund due on the basis of return furnished.

Below persons shall not be eligible to file Updated Return

1. Search has been initiated u/s 132 or books of accounts or other documents or any assets are requisitioned u/s 132A.
2. Survey has been conducted u/s 133A (Other than u/s 133A(2A)).
3. Notice has been issued to the effect that any money, bullion, jewelry or valuable article or thing, seized or requisitioned u/s 132 / 132A.
4. Notice has been issued to the effect that any books of account or documents, seized or requisitioned under section 132 or section 132A.
5. Any prosecution proceedings under the Chapter XXII have been initiated for the relevant assessment.
6. Information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated.
7. Assessing Officer has information for the relevant assessment year for the below and same has been communicated.

• Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
• Prohibition of Benami Property Transactions Act, 1988.
• Prevention of Money-laundering Act, 2002.
• Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Can the UPDATED RETURN be revised?

NO. One updated return for a particular assessment year can be filed.

How to file Updated Return?

Rule 12AC prescribes the form and manner of filing updated return. ITR-U is the new form and taxpayers can use it to file updated income tax returns.