Section 139(8A) – Updated Return

Last updated on November 4th, 2022 at 07:29 pm

Section 139(8A) – Updated Return

With the advancements of automation, technology, and artificial intelligence, Government is in receipt of a wide range of information that has led to the belief that taxpayers should be given an additional time period to voluntarily furnish a correct updated return of income tax. Provision to furnish such correct updated return which is likely to reduce the potential litigation has been introduced by a new section 139(8A) in the Union Budget 2022.

CBDT inserts Rule 12AC to notify the income tax return form for filing updated return u/s 139(8A) – Notification 48/2022 dated 29.04.2022.

When an updated return u/s 139(8A) can be filed?

An updated return can be filed by any person whether the original return or belated return or revised return was filed or not. It will give taxpayers an opportunity to file the correct tax return only if the tax liability is payable within the extended period of 24 months from the end of the assessment year. An updated return shall be accompanied by proof of payment of tax as required by section 140B.

Note: Updated Return under this section can be filed only once for an assessment year. i.e Updated return cannot be updated once filed.

When an updated return u/s 139(8A) cannot be filed?

An updated return cannot be filed if the updated return is going to result in

• Decrease in the tax liability declared earlier.
• Increase in the claim of refund filed earlier.
• It is a loss return or increase in the loss declared earlier.

Who is not eligible to file an updated return u/s 139(8A)?

The following assessees will not be eligible to file an updated return for the assessment year for which

• If a search has been initiated for that assessment year u/s 132.

• If books of account or assets are requisitioned for that assessment year u/s 132A. Note: While conducting a search or requisition books of accounts or assets of any other person, if any money, bullion, jewellery, or valuable article, thing, books of account, or documents belonging to you has been seized or requisitioned u/s 132 or 132A and notice for same has been issued.

• If a survey has been conducted for that assessment year u/s 133A. Note: Assessee will be eligible to file an updated return if the survey for checking TDS/TDS compliance u/s 133A(2A) has been conducted for that assessment year.

• If any proceeding for assessment or reassessment or recomputation or revision of income is pending or has been completed for that assessment year.

• If any prosecution proceedings under Chapter XXII have been initiated for that assessment year.

• If any proceedings are pending or information received under an agreement referred to u/s  90 or 90A in respect of the assessee and the same has been communicated to the assessee.

• If AO is in possession of relevant information and the same has been communicated to the assessee for that assessment year under the
  • Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 or
  • Prohibition of Benami Property Transactions Act, 1988 or
  • Prevention of Money-laundering Act, 2002 or
  • Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

What is the time limit for furnishing updated return u/s 139(8A)?

An updated return u/s 139(8A) can be filed within twenty-four months from the end of the relevant assessment year.

Note: The time limit to file the income tax return u/s 139(1) or revised income tax return u/s 139(4) or belated income tax return u/s 139(5) should have lapsed.

What are the benefits of filing an updated return?

• Updated Return can be filed in the extended time period of 24 months.

• It is likely to reduce the potential litigation which might arise otherwise.

• Tax payout is likely to be less compared to proceedings for undisclosed income or income escaping assessments are initiated.

How much additional tax is to be paid while filing an updated return?

A new section 140B has been inserted which provides the provisions of additional tax payable in case an updated return is filed.

Additional Tax payable shall be

• 25% of the aggregate of tax and interest payable if paid within the first 12 months from the end of the relevant AY.

• 50% of the aggregate of tax and interest payable if paid after the expiry of  12 months but within the expiry of 24 months from the end of the relevant AY.

Note: A separate challan for payment of tax u/s 140B has not been notified by the Government yet. Taxpayers filing the updated return should pay using challan no 280 with minor head 300. And details of challan shall be mentioned against section 140B under schedule Part-B ATI in the updated return.

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Computation of tax payable with updated return 

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Note: For simplicity, figures of tax include the interest, cess, and surcharge if applicable.

Note: Interest u/s 234A, 234B, and 234C shall be payable for delay in payment of tax.

Note: Penalty for delay in furnishing ITR u/s 234F will be applicable only if return u/s 139(1) was not furnished.

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CA Ankita Khetan

Founder at Financepost.in

Chartered Accountant in practice, DipIFRS (from ACCA, UK), Post Graduate in Commerce, Certified Independent Director (from IICA), and holds a certification in Forex and Treasury Management course (by ICAI).

She can be contacted at info.financepost@gmail.com

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