What is updated return and its utility to the taxpayer?

​ Ans. Finance Bill 2022 has inserted a new section, section 139(8A) in Income Tax Act. This new section provides for filing of ‘Updated Return’ by the taxpayers. The taxpayer can file an updated return within two years from the end of the relevant Assessment Year. So during the current financial year 2022-23, taxpayers can file ITR-U for AY 2020-21 and AY 2021-22. i.e., the return for FY19-20 can be updated till 31st March 2023.

Updated return can be filed irrespective of the fact, whether the original return was filed by the taxpayer or not. However, to file an updated return, the taxpayer has to meet the conditions prescribed in section 139(8A) of the IT Act 1961, including:

1. The updated return can be filed only if the taxpayer has to disclose any additional income, which was missed / omitted earlier, and pay the additional tax thereon.

2. Updated return cannot be filed to reduce any income and report loss or increase the loss thereby resulting in reduction of tax liability or increase in tax refund.

3. The option of updated return can be opted only once for one assessment year.

4. If the updated return is being filed within 12 months from the end of the relevant assessment year, then an additional income tax of 25% and interest thereon shall be payable. If the return is filed within 24 months, from the end of the relevant assessment year, then an additional income tax of 50% and interest thereon shall be payable.

This facility of filing an updated return can also be viewed as an opportunity to disclose the earlier missed income and pre-empt further proceedings under the I.T. Act.