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Updated Income Tax Return- An option to file or Revise the ITR of earlier year with additional tax payment
I am a salaried taxpayer. I was transferred from Surat to Raipur in 2020. Due to confusion, health issues, internal family disputes & covid, I failed to file the return from 2018 & onwards despite TDS credit in my Form No 26AS. Similarly, my return for the year 2021-22 is also not filed so far? Can I file all the returns now? Do I need to file the revised return or updated return for the last 5 years? Whether for the year 2022 I have to file the updated returns? If an updated return is not allowed, how can I file it now? Can I avoid additional tax liability where an updated return option is available? Please guide. [firstname.lastname@example.org]
“Finance Act 2022 introduced a new provision of filing Updated Income Tax Returns U/s 139(8A) of the Income Tax Act-1961. Over 1.55 Lakh updated ITR’s have been filed up to 2nd September 2022. More than 20,000 taxpayers have filed Updated ITR for both AY’s 2020-21 & 2021-22” – Tweet @IncomeTaxIndia.
The data released by the income tax department suggests that there are many taxpayers who have failed to file the income tax return or filed the returns without incorporating all the income details. All such taxpayers who have not filed the return or have not incorporated all the income in the ITR filed can use the option of filing “Updated Income Tax Return”. Let us know more about it:
- Income Tax Return filing is an obligation which is required to be carried out by the taxpayers in a time bound manner within the due date. The return filed within the due date is referred to as the “Original Return”. If the return could not be filed within the due date then such person can file the “Belated Return” under an extended period with certain late fee. Further, if the person notices the error or omission in the original or belated return then such person can rectify it by filing the “Revised Return”. However, all above returns can be filed up to a maximum of 9 months only after the end of the financial year. After 9 months, the only option left is filing the “Updated Return” U/s 139(8A) of the Income Tax Act-1961.
- Concept of Updated Return:
Section 139(8A) has provided an additional time period to the genuine taxpayers to file or rectify the income tax return by way of Updated Return. This return can be filed within 3 years from the end of the relevant financial year (i.e., 2 years from the end of the Assessment Year). The new provision would be effective from 1st April, 2022. It means that the person cannot file the updated return for the FY 2018-19. However, it can be filed for the FY 2019-20 & onwards. All those taxpayers who may have inadvertently missed out on disclosing any income while filing their tax returns of earlier years or have failed to file the return for any reason whatsoever can now file an “Updated Return”.
- Payment of Additional Tax:
Filing an “Updated Returns” is a little more taxing. Taxpayers are required to pay an extra amount of tax of 25% or 50% depending upon the period of delay. An additional amount of 25% of the tax & interest will be payable if the updated return is filed within 2 years from the end of the relevant financial year. However, the additional tax would be 50% if the updated return is filed after 2 years from the end of the relevant assessment year.
- Not for the Benefit of the taxpayers:
Updated return can be filed only if it is beneficial to the income tax department. The route of updated return cannot be used by the taxpayers to claim benefits or concessions. Updated return cannot be filed if it is a return of a loss or has the effect of decreasing the total tax liability determined on the basis of return furnished earlier or if it results in refund or increases the refund due on the basis of return furnished earlier.
- Who cannot file Updated Return:
There are certain categories of taxpayers who are barred from filing the Updated Return. These are mostly the persons in whose case information is already there with the department or in whose case any other proceeding has been initiated by the department. To be more specific, the following categories of persons are prohibited from filing updated returns:
a) Taxpayers in whose case income tax raid has been carried out or where income tax survey (Other than TDS survey) has been conducted. Similarly, taxpayers who have been issued notice with regard to the money, bullion, jewellery or valuable articles or things or books of accounts, seized or requisitioned in income tax raids or surveys of any other person are also barred from filing updated returns.
b) Taxpayers in whose case any proceeding for assessment or reassessment or re-computation or revision of income under the Act is pending or has been completed for the relevant assessment year
c) If the Assessing Officer has information in respect of the taxpayers for the relevant assessment year under the Prevention of Money Laundering Act, 2002 or the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 or the Prohibition of Benami Property Transactions 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 updated return.
d) Taxpayers in whose case information for the relevant assessment has been received under an agreement referred to in sections 90 or 90A of the Act in respect of such person and the same has been communicated to the taxpayers prior to the filing of updated return.
e) Taxpayers in whose case any prosecution proceedings under Chapter XXII have been initiated
- Updated Return is a “One Time Offer”:
An updated return can be furnished only once. If a person has already filed an updated return, it cannot file the updated return again for the same assessment year at subsequent occasions.
- In your specific case:
a) There is no option to file the return for the FY 2017-18 & 2018-19.Even if the taxpayers want to declare the additional income or want to pay the additional tax, there is no option at present with the taxpayers to do so voluntarily. The only option in such a case could be by seeking the condonation from the jurisdictional Commissioner of Income (CIT) U/s 119(2)(b) of the Income Tax Act-1961. You can approach the CIT with all the relevant documentary proof & justification in support of your non-filing of the ITR. If CIT condones the delay considering the genuineness of the case, you may file the return for the said years.
b) For FY 2019-20 & 2020-21, you can file the “Updated Return” as discussed above. However, all the updated returns will be subject to the “Additional Tax” liability as discussed above. The only option to avoid the additional tax could be by taking the condonation U/s 119(2)(b) only. If condones, you can file the regular return and can avoid the penalty as applicable to the Updated Returns.
c) For FY 2021-22 (AY 2022-23), you can file the belated return till 31.12.2023, albeit with a small late fee.
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