As per the new provisions introduced in finance bill 2022, taxpayers can now file an updated income tax return with effect from the financial year 2021-22 (assessment year 2022-23).
Such updated return of income can be filed within 24 months from the end of the relevant assessment year.
We have written an article on when an updated income tax return can be filed in India. In this, you will also know cases where an updated return can not be filed.
In this article, we will be discussing tax and interest liability on updated returns and how much additional tax to be paid while filing an updated income tax return.
Tax to be paid on updated income tax return
As per the present tax laws, income tax return has to be furnished as per the provisions of section 139(1) on or before the due date of filing.
If you missed the due date of filing your income tax return, then as per section 139(4) you can file your ITR on or before 31st December of the assessment year relevant to the previous year for which return is to be filed. You are also allowed to rectify mistakes, if any, before 31st December of the relevant assessment year under section 139(5).
Whether the return of income under section 139(1), 139(4) or 139(5) has been furnished or not, an updated return can be filed under section 139(8A). This means, if you have filed your return of income within the due date or before 31st December of the assessment year or before the extended due dates, then an updated return can be filed by you. In case you missed all these dates to file your income tax return, then also you can file an updated return.
In both the cases, the assessee shall be liable to pay tax together with interest and fee payable under any of the provisions of this act for any delay in furnishing the return or any default or delay in payment of advance tax along with the payment of additional income tax computed in accordance with section 140B(3) after taking into account,-
- The amount of tax, if any already paid as advance tax;
- Self assessment tax if any paid in earlier return;
- Any tax deducted or collected at source;
- Any relief of tax claimed under section 89;
- Any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India;
- Any relief of tax claimed under section 90A on account of tax paid in any specified territory outside india referred to in that section;
- Any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD; and
If any refund has been issued in respect of such earlier return for which updated return is to be filed, then the net tax liability should be increased by the amount of such refund.
Interest payable under section 234A, 234B and 234C shall be calculated on the amount of tax on the total income as declared in the updated return of income under section 139(8A) after taking into account all taxes and interest paid, deposited and/or collected by the tax department for the relevant financial year.
How much additional income tax to be paid for filing updated return U/S 139(8A)
Assessee is liable to pay additional income tax at the time of furnishing the updated return under section 139(8A). Such additional income tax shall be equal to,-
- 25% of aggregate of tax and interest payable, as determined in section 140B(1) or section 140B(2), as the case may be, if such return is furnished after expiry of the time available under section 139(4) or section 139(5) and before competition of the period of 12 months from the end of the relevant assessment year; or
- 50% of aggregate of tax and interest payable, as determined in section 140B(1) or section 140B(2), as the case may be, 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 tax will not be paid if you file your updated return of income on or before 31st December of the assessment year relevant to the previous year for which return is to be filed. You can even take advantage of filing a revised return instead of filing an updated return as the time limit to file revised income tax return is 31st December of the relevant assessment year. You can refer to our earlier article to know the difference between a revised return and updated return.
31st December of the assessment year is the last date available to file your income tax return under section 139(4) and 139(5). If such date has been extended by the CBDT, then such extended date will be considered as the due date of filing.
While filing an updated return, if tax is payable on the basis of the return to be furnished by such assessee, then the return shall be accompanied by proof of payment of such tax, additional income tax, interest and fee.
