Updated Return & Tax on updated return - Section 139(8A) & 140B - Income Tax - Ready Reckoner - Income Tax

Updated Return - Section 139(8A) Provision for filing updated return u/s 139(8A) and new section 140B (inserted for computation of tax) [Amendment made by the Finance Act, 2022] I Updated Return: Any person may furnish an updated return of his income (or the income of any other person in respect of which he is assessable). The provision of the section is applicable from 1 st April, 2022. II Time-limit: Updated return u/s 139(8A) can be submitted at any time within 24 months from the end of the relevant AY. For instance, updated return for the AY 22-23 can be submitted on or before 31 st March, 2025. III Who can submit updated return Updated return can be submitted by any person whether or not he has furnished a return u/s 139(1)/(4)/(5) for an AY. IV Updated return cannot be submitted in following cases:- 1. If updated return is return of a loss. 2. If updated return has the effect of decreasing the total tax liability determined on the basis of return furnished u/s 139(1)/(4)/(5) or results in refund or increases the refund due on the basis of return furnished u/s 139(1)/(4)/(5) , of such person for the RAY. 3. A person shall not be eligible to furnish updated return, if- (a) Search has been initiated u/s 132 or books of account, other documents or any assets are requisitioned u/s 132A in the case of such person, or (b) A survey has been conducted u/s 133A (other than TDS/TCS survey) of that section in the case of such person, or (c) A notice has been issued to the effect that any money, bullion, jewellery or valuable article or thing, seized or requisitioned u/s 132 or 132A in the case of any other person belongs to such person, or (d) A notice has been issued to the effect that any books of account or documents, seized or requisitioned u/s 132 or 132A in the case of any other person, pertain or pertains to, or any other information contained therein, relate to, such person. Note: This provision is for the AY relevant to the PY in which such search is initiated or survey is conducted or requisition is made and any assessment year preceding such assessment year. Example: If search is initiated on 25 th June 2024, then updated return cannot be submitted for the AY 2025-26 or any preceding AY. 4. No updated return shall be furnished by any person for the RAY, where - (a) An updated return has been furnished by him u/s 139(8A) for the RAY, or (b) Any proceeding for assessment/reassessment/recomputation/revision of income is pending or has been completed for the RAY in his case, or (c) The AO has information in respect of such person for the RAY 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 Transaction 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 u/s 139(8A) , or (d) Information for the RAY has been received under an agreement u/s 90 or 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return u/s 139(8A), or (e) any prosecution proceedings under the Chapter XXII have been initiated for the RAY in respect of such person, prior to the date of furnishing of return u/s 139(8A), or (f) He is a person or belongs to a class of persons, as may be notified by CBDT. V. Other Points: The following points should be noted: - 1. If a person has sustained a loss for any PY and he has already submitted return of loss for that year within due date u/s 139(1), he can furnish an updated return for that year u/s 139(8A) where such return is a return of income. 2. If as a result of submitting updated return under section 139(8A) , the quantum of carried forward loss or unabsorbed dep or MAT/AMT credit is to be reduced for any subsequent year, then an updated return shall be furnished for each such subsequent year. VI Updated return to be accompanied by proof of payment of tax and additional income tax updated return cannot be submitted unless it is accompanied by proof of payment u/s 140B . Tax on updated return - Section 140B VII Mode of computation of tax including additional tax is provided u/s 140B as follows: - A. Where Assessee has not furnished return earlier Where no return of income under section 139(1)/(4) has been furnished by an assessee , he shall before furnishing updated return u/s 139(8A) is liable to pay the tax due together with interest and fee payable under any provision of the Act for i) any delay in furnishing the return or ii) any default or delay in payment of advance tax iii) along with payment of additional tax The tax payable shall be computed after considering the following :- The Amount of advance tax (already paid); Any TDS/TCS; Any relied of tax claimed u/s 89 / 90 / 90A / 91 ; Any AMT/MAT credit u/s 115JAA / 115JD . Such updated return shall be accompanied by proof of payment of such tax, interest, fee under section 234F and additional tax under section 140B(3). [ Section 140B(1) ] B. Where Assessee has furnished return earlier - If an assessee has furnished return under section 139(1)/(4)/(5) , For submitting updated return is liable to pay tax due together with interest payable under any provision of the Act for any default or delay in payment of advance tax, along with the payment of additional tax, as reduced by the amount of interest paid in earlier return. The tax payable shall be computed after considering the following: - a. The amount of relief or tax, referred to in sec 140A(1), credit for which has been taken in the earlier return; if any; TDS/TCS 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 u/s 90 / 90A / 91 which has not been claimed in earlier return Any MAT/AMT credit claimed, to be set off which has not been claimed in the earlier return. b. The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of earlier return. Such updated return shall be accompanied by proof of payment of such tax, interest, fee under section 234F and additional tax under section 140B(3). [ Section 140B(2) ] VIII Computation of Additional Tax - As per section 140B(3) the additional income-tax payable at the time of furnishing the updated return calculated as follows - (i) If updated return is furnished after expiry of time available u/s 139(4)/(5) but before completion of 12 months from the end of RAY 25% of aggregate of tax (including surcharge cess) and Interest payable as computed above (ii) If updated return is furnished after expiry of 12 months but before completion of 24 months from the end of RAY 50% of aggregate of tax (including surcharge cess) and Interest payable as computed above IX How to compute interest u/s 234B where an earlier return is furnished: - Where an earlier return has been furnished, interest payable u/s 234B shall be computed on an amount equal to the assessed tax or on the amount by which the advance tax paid falls short of the assessed tax [ Omitted from the 1st day of April, 2022 Amendment by F.A. 2023 ] , where, assessed tax means the tax on the total income as declared in the updated return after considering following: - (a) The amount of relief or tax referred to in section 140A(1) , the credit for which has been claimed in the earlier return, if any; TDS/TCS on any income declared in updated return and which has not been claimed in earlier return; Any relief/deduction u/s 90 / 90A / 91 which has not been claimed in the earlier return; And AMT/MAT credit u/s 115JAA / 115JD , which has not been claimed in the earlier return. (b) The aforesaid tax shall be increased by the amount of refund, if any, issued in respect of earlier return. [ Section 140B(4) ] X Other Points: The following points should be noted: - (i) If no earlier return is furnished, interest payable u/s 234A shall be on the basis of tax on total income as declared in the updated return. (ii) If earlier return is furnished, interest payable u/s 234C shall be computed after considering the total income furnished in the updated return u/s 139(8A) as the returned income. (iii) For the purpose of additional tax u/s 140B(3) , interest payable interest chargeable under any provision of this Act, on the income as per updated return, as reduced by interest paid, in accordance with the earlier return, However, the interest paid in the earlier return shall be nil if no earlier return is furnished.