Section 139(8A): Attributes, Exceptions, and Conditions
Updated: Dec 15, 2023
To provide individuals with ample time for submitting their updated income tax returns, a proposal has been made to introduce a new provision under section 139(8A) of the Act. This provision allows individuals to furnish their updated income tax returns, regardless of whether they have previously submitted a return for the relevant assessment year or not.
Table of Content
The article delves into the provisions of Section 139(4) and Section 139(5) of the Income Tax Act, shedding light on the opportunities they offer for filing Belated Returns and Revised Returns, respectively.
Empowering the Assessee: Filing an Updated Return
With the introduction of Section 139(8A), taxpayers are given the flexibility and freedom to rectify, amend, or update their income tax returns within the specified timeframe. The provision allows individuals to revisit and revise their financial records, incorporating any changes or new information that may impact their tax liability.
Exploring the requirements and circumstances for filing an updated return, let's examine the key conditions:
Condition 1: Additional Income and Increased Tax Liability
The updated return can be filed when the taxpayer needs to report additional income, resulting in a higher tax liability compared to the original return.
Condition 2: Single Updated Return per Assessment Year
Only one updated return can be furnished for a specific assessment year. It is important to ensure that any necessary revisions or amendments are incorporated in this single updated return.
Condition 3: Imposition of Additional Tax and Interest
If the updated return is filed within 12 months or 24 months from the conclusion of the assessment year, an additional tax will be levied at a rate of 25% or 50% of the average tax, respectively. Corresponding interest will also be applicable. Proof of payment of the required tax, interest, late filing fees, and additional tax must be provided while filing the updated return.
Condition 4: Exceptions to Updated Return Filing
Certain scenarios exempt the filing of an updated return. This includes cases where the return reflects a loss, decreases tax liability, or results in a refund. Additionally, the updated return cannot be filed in situations involving search and seizure, ongoing prosecution proceedings against the taxpayer, or pending/completed assessment, reassessment, revision, or re-computation.
Navigating the Requirements
Understanding these conditions is crucial to ensuring compliance and making informed decisions when it comes to filing an updated return. It is essential to assess your specific circumstances and consult with tax professionals to ensure accurate and timely submissions.
By adhering to the prescribed guidelines and exceptions, taxpayers can navigate the intricacies of updated return filing, maintain compliance with tax regulations, and address any changes or discrepancies in their financial records.
Section 139(4) serves as a ground for those who have missed the deadline for filing their tax returns. It grants individuals the chance to rectify their oversight by submitting a Belated Return. This provision acknowledges that circumstances can sometimes hinder timely compliance, ensuring that individuals aren't completely barred from fulfilling their tax obligations. Whether due to unforeseen circumstances or oversight, Section 139(4) comes to the rescue, allowing taxpayers to file their returns even after the official due date has passed.
On the other hand, Section 139(5) provides a valuable avenue for taxpayers to amend their filed returns, should the need arise. It allows for the submission of a Revised Return within three months prior to the culmination of the relevant Assessment Year or before the completion of the assessment process, whichever comes earlier. This provision recognizes that sometimes new information or unforeseen changes in financial circumstances may necessitate a revision of the initially filed return.
Exploring the Eligibility and Timeline for Updated Returns, section 139(8A)
Eligibility: Any Person, Regardless of Prior Filings
The ground of Updated Returns lies in their accessibility to all individuals, regardless of whether they have previously filed a return under Section 139(1), Section 139(4), or Section 139(5) of the Income Tax Act. This provision opens the door for anyone to rectify any inaccuracies or changes in their original tax return submission.
Timeline: Within 24 Months from the End of the Relevant Assessment Year
To ensure compliance and timely submission, it is important to be aware of the precise timeframe for filing an Updated Return. According to the regulations, individuals have a period of 24 months from the conclusion of the relevant Assessment Year to submit their Revised Return.
Exceptions to the Updated Return Provision: A Closer Look
When it comes to filing an Updated Return, it's important to understand that there are exceptions to this provision. In this article, we explore the circumstances in which the ability to submit an Updated Return does not apply. Let's dive into each exception and gain a comprehensive understanding of its implications.
Exception 1: Returns Reflecting Loss
The first exception arises when the Updated Return pertains to reporting a loss. In such cases, the provision for filing an Updated Return does not apply. This means that if the revised return shows a loss, individuals are not eligible to avail themselves of the Updated Return option. It is important to note that this exception specifically pertains to returns that result in a loss.
Exception 2: Decreased Tax Liability
The second exception applies when the Updated Return has the effect of reducing the total tax liability that was determined in the original return filed under Section 139(1), Section 139(4), or Section 139(5). In other words, if the revised return shows a decrease in the overall tax liability calculated based on the original return, the option to file an Updated Return is not applicable.
Exception 3: Refund Due
The third exception comes into play when the Updated Return results in a refund that is due based on the original return filed under Section 139(1), Section 139(4), or Section 139(5). In such cases, if the revised return shows that a refund is owed to the taxpayer, the provision for filing an Updated Return does not apply.
Exception 4: Increased Refund
The fourth and final exception relates to cases where the Updated Return leads to an increase in the refund amount that was determined based on the original return filed under Section 139(1), Section 139(4), or Section 139(5). If the revised return demonstrates a higher refund amount owed to the taxpayer, the option to file an Updated Return is not applicable.
Who can file ITR-U?
Any individual who has erred or omitted income details in one of the following types of returns can file an updated return:
Original return of income
Belated return
Revised return
An updated return can be filed in the following scenarios:
Failure to file the return, missing both the return filing deadline and the belated return deadline.
Incorrect declaration of income.
Selection of the wrong head of income.
Payment of taxes at an incorrect rate.
To offset carried forward losses.
To offset unabsorbed depreciation.
To offset tax credits under sections 115JB/115JC.
A taxpayer can file only one updated return for each assessment year (AY).
Who is Not Eligible to File ITR-U?
ITR-U cannot be filed in the following circumstances:
An updated return has already been filed.
Filing a nil return or a loss return.
Seeking to claim/enhance the refund amount.
When the updated return results in a reduced tax liability.
Initiation of search proceedings under section 132.
Conducting a survey under section 133A.
Seizure or requisition of books, documents, or assets by the Income Tax authorities under section 132A.
If assessment/reassessment/revision/re-computation is pending or completed.
When no additional tax is payable (i.e., when the tax liability is adjusted with TDS credit/losses, and there is no additional tax liability).
ITR-U Form Download
To access the ITR-U form, download it from the official website.
What is the Time Limit to File ITR-U?
The time limit for filing ITR-U is 24 months from the end of the relevant assessment year. ITR-U became applicable from April 1, 2022. Therefore, during the current financial year 2022-23, you can file ITR-U for AY 2020-21 and AY 2021-22. For instance, the return for FY 2019-20 can be updated until March 31, 2023.
Penalty / Additional Tax Payable
Penalty for Filing Updated Return
When filing an updated return, a penalty is applicable. The penalty structure is as follows:
Filed within 12 months from the end of the relevant assessment year: A penalty equal to 25% of the aggregate of tax and interest payable upon filing the updated return.
Filed after 12 months from the end of the relevant assessment year: A penalty equal to 50% of the aggregate of tax and interest payable upon filing the updated return.
It's essential for taxpayers to be aware of these penalties and their timelines when considering the filing of an updated return.
FAQs:
Q1. Can an updated return be filed multiple times for a given assessment year?
Multiple filings for an updated return under section 139(8A) are not permitted for the same assessment year. Once the updated return has been submitted, it cannot be revised, altered, or canceled.
Q2. What does an Updated Return (ITR U) entail?
ITR U allows assessees to file returns after the due date or make changes to previously filed returns with expired revision dates. This provision is established under section 139(8A) of the Income Tax Act, 1981.
Q3. What are the advantages of filing an updated return under section 139(8A)?
Filing an updated return offers several benefits, including the ability to rectify undisclosed income from earlier returns, protection against legal proceedings and prosecution, and a reduction in potential litigation.
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