Missed Filing Income Tax Return for FY 2019-20 and/or FY 2020-21?
The Finance Act, 2022 has introduced the concept of an ‘UPDATED RETURN’. A new section 139(8A) has been inserted in Income Tax Act, 1961 (the Act) to allow a person to file an updated return of income under certain circumstances.
This is effective from 01st April, 2022, and the time limit provided for filing an updated return is 24 months from the end of the relevant assessment year (AY). In the Financial Year (FY) 2022-23, a person can file an updated return for FY 2019-20 (AY 2020-21) and FY 2020-21 (AY 2021-22).
Who can file an Updated Return?
The following persons are eligible to file an updated return of income:
- A person who has filed his return of income;
- A person who has not filed his return of income;
- A person who has filed a belated return of income;
- A person who has filed a revised return of income
The following persons are ineligible to file an income tax return:
- Search operation has been conducted in the case of such person, or
- A survey has been conducted in the case of such person, or
- A notice has been issued in respect to give effect of any money, bullion, jewellery or valuable article or thing, seized or requisitioned under search or survey in the case of any other person belongs to such person, or
- A notice has been issued in respect to give effect of any books of account or documents, seized or requisitioned under search or survey in the case of any other person which relate to such person.
- an updated return has been already filed for relevant assessment year, or
- Any proceeding for assessment or reassessment or recomputation or revision of income under the Act is pending or has been completed for the relevant assessment year in his case, or
- The Assessing Officer has information under certain Acts and the same has been communicated to him, prior to the date of his filing of updated return.
- If a person or belongs to a class of persons, as maybe notified by the Central Board of Direct Taxes (the Board) in this regard.
Who can file an Updated Return?
- If the updated return is return of loss
- If the updated return has effect of decreasing the total tax liability determined on the basis of return filed earlier.
- If the updated return results in refund or increases the refund due on the basis of return filed earlier.
An additional tax is required to paid by an assessee on the filing of an updated return.
The additional tax is payable at the time of furnishing the updated return shall be equal to:
- 25% of aggregate of tax and interest payable as determined, if such return is furnished after due date of filing revised or belated return and before completion of period of 12 months from the end of the relevant assessment year.
- 50% of aggregate of tax and interest payable as determined, if such return is furnished after the expiry of 12 months from the end of the relevant assessment year but before completion of the period of 24 months from the end of the relevant assessment year.
‘Additional income-tax’ shall include surcharge and cess, on such tax.
Advantages of filing an updated return:
The taxpayers can avoid following on the additional income disclosed in the Updated Return:
- Penalties for under-reporting of income which ranges from 50% to 200% of tax.
- Fines on failure to furnish a return and prosecution which can result in imprisonment extending up to seven years.
The Board has notified Rule 12AC of the Income Tax Rules & also Form ITR-U for filing of updated IT Returns in which the assessee will disclose only the amount of additional income under prescribed income heads, on which additional tax is required to be paid. Also, the exact reasons for filing the updated return will have to be specified. The Form ITR-U shall be required to be filed along with the respective ITR to furnish an updated return of income.