Updated return

Dimensions of updated return as per Section 139(8A) & Tax on Updated Return as per Section 140B of Income Tax Act, 1961 Introduction The Finance Act 2022 provided an opportunity to tax payers to correct omissions or errors by filing “Updated Return” within 2 years from the end of relevant assessment year along with additional payment of tax and incidental interest. After obtaining assent on 31st March, 2022 from the Hon’ble President of India, a new sub section (8A) under section 139 of the Income-tax Act, 1961 (‘the Act”) is inserted for filing of updated return with effect from 1 st April, 2022 i.e Assessment year 2022-23. The objective of introducing this facility is to promote voluntary tax compliance and reduce litigation. Intention of the Government The due date under existing provisions of sections 139(4) and 139(5) for filing of belated/revised returns ends at 3 months prior to the end of relevant assessment year. Hence, the total time limit provided after the end of a particular financial year is only 9 months, after which return of income cannot be filed. This additional timeline for filing a belated/revised return may not be adequate when we factor in utilization of huge information and data available coupled with the “nudge approach” that motivates the taxpayer towards the desired objective of voluntary tax compliance, starting with filing of correct tax returns and IT department will have logical data to arrive to correct conclusion including additional revenu...

Dimensions of updated return as per Section 139(8A) & Tax on Updated Return as per Section 140B of Income Tax Act, 1961 Introduction The Finance Act 2022 provided an opportunity to tax payers to correct omissions or errors by filing “Updated Return” within 2 years from the end of relevant assessment year along with additional payment of tax and incidental interest. After obtaining assent on 31st March, 2022 from the Hon’ble President of India, a new sub section (8A) under section 139 of the Income-tax Act, 1961 (‘the Act”) is inserted for filing of updated return with effect from 1 st April, 2022 i.e Assessment year 2022-23. The objective of introducing this facility is to promote voluntary tax compliance and reduce litigation. Intention of the Government The due date under existing provisions of sections 139(4) and 139(5) for filing of belated/revised returns ends at 3 months prior to the end of relevant assessment year. Hence, the total time limit provided after the end of a particular financial year is only 9 months, after which return of income cannot be filed. This additional timeline for filing a belated/revised return may not be adequate when we factor in utilization of huge information and data available coupled with the “nudge approach” that motivates the taxpayer towards the desired objective of voluntary tax compliance, starting with filing of correct tax returns and IT department will have logical data to arrive to correct conclusion including additional revenu...