As the deadline for filing the Income Tax Return (ITR) for the Assessment Year 2023-24 (Financial Year 2022-23) has passed, individuals who missed the date can still file their updated returns for the Financial Year 2020-21 until March 31, 2024. Understanding the provisions and guidelines related to updated returns is crucial, and this comprehensive guide aims to simplify the process.
What is an Updated Return?
An updated return is a mechanism that allows taxpayers to file their returns within 24 months from the end of the relevant assessment year, providing additional time for compliance. This provision is designed to encourage voluntary tax compliance among taxpayers. Notably, an additional tax ranging from 25% to 50% is applicable when filing an updated return (Section 139(8A), Section 140B, Rule 12AC).
Key Points about Updated Returns:
| Aspect | Details |
|---|---|
| Optional Filing | The decision to file an updated return rests with the taxpayer, and it can be filed regardless of whether an original, belated, or revised return was previously submitted. |
| Eligibility | Any person can file an updated return, including those filing on behalf of others or in cases of clubbing income. |
| Time Limit | The provision for updated returns became effective from April 1, 2022, allowing a 24-month window from the end of the relevant assessment year. |
Filing Process and Forms
Forms for Updated Returns
When filing an updated return, the taxpayer should use the relevant ITR Form applicable to their situation. The Schedule 'Part A Gen_139(8A)' and Schedule 'Part B ATI' of the relevant form need to be filled for an updated return.
Manner of Filing
| Taxpayer Category | Filing Method |
|---|---|
| Companies, Political Parties, Entities requiring audit under Section 44AB | Electronically with a Digital Signature Certificate (DSC). |
| Other Taxpayers | Electronically using either a DSC or Electronic Verification Code (EVC). |
Reporting in ITR
When filing an updated return, specific details must be provided in the relevant ITR forms, including:
| Details to Provide | Information to Include |
|---|---|
| Basic Details | PAN, Name, and Aadhaar Number. |
| Earlier Return Info | Acknowledgment number and date of filing of the previous return. |
| Reasons for Filing | Why the updated return is being filed. |
| Additional Income | Head-wise reporting of additional income. |
| Tax Payments | Details of tax payments and relief under section 89. |
| Disclosure of Missed Income | In cases where a taxpayer realizes they have omitted to disclose certain income in the original or revised return, the updated return provides an opportunity to rectify this omission. This disclosure is crucial for maintaining accurate financial records and complying with tax regulations.
Restrictions on Updated Returns
While updated returns offer flexibility, certain restrictions apply:
| Restrictions | Details |
|---|---|
| Return of Loss | Updated returns cannot be filed if they reflect a total income loss. However, having a loss under a specific income head doesn't prohibit filing an updated return. |
| Decreased Tax Liability | An updated return cannot be filed if it reduces the total tax liability determined based on an earlier return. |
| Increased Refund | If an updated return results in an increased refund, it cannot be filed. |
| Initiation of Search, Requisition, or Survey | Updated returns cannot be filed if a search, requisition, or survey is initiated against the assessee. |
| Other Specific Circumstances | Various situations, such as pending assessments, initiated prosecutions, or information under specified Acts, DTAA, TIEA, can restrict the eligibility for filing updated returns. |
Challan under Section 140B and Updated Return Verification
In cases where the taxable income is non-existent, a specific challan under Section 140B with an amount of Rs. 1000 needs to be paid before filing the Income Tax Return. For cases where tax is due, an additional 25% or 50%, as applicable, has to be paid. This payment is mandatory before filing the return and must be verified immediately, with no provision for verification after the ordinary 30-day window.
Curative Updated Return of Subsequent Years
When an updated return reduces certain amounts for subsequent years (e.g., carried forward losses), updated returns must be filed for those years to ensure accurate carryforward calculations.
Example:
If Mr. A filed an updated return for AY 2020-21, reducing losses, he must file updated returns for subsequent years to maintain accurate loss carryforward records.
Tax on Updated Returns
The provisions of Section 140B govern the payment and computation of tax, interest, fee, and additional income tax on updated returns.
Computation of Tax, Interest, and Fee
The computation of tax, interest, and fee depends on whether a return was filed earlier or not.
| Scenario | Computation Details |
|---|---|
| No Earlier Return Filed | Self-assessment tax, interest, and fee for late filing are calculated based on various factors like advance tax, TDS, relief under section 89, and more. |
| Earlier Return Filed | The calculation considers taxes already paid, relief or credits claimed, and any refund issued in the earlier return. |
| Additional Tax on Updated Returns | Additional income tax is levied based on the timing of filing the updated return, with rates of 25% within 12 months and 50% within 24 months from the end of the relevant assessment year. |
It's crucial to note that the computed tax, interest, and fee must be paid along with proof of payment to avoid the return being treated as defective.
Conclusion
Filing an updated return provides taxpayers with an opportunity to correct and enhance their tax compliance within a specified timeframe. Understanding the provisions, eligibility criteria, and the computation process is vital to ensure a smooth and accurate filing process. For individuals who missed the recent deadline, the window to file updated returns for the Financial Year 2020-21 is open until March 31, 2024. As compliance is crucial for a hassle-free financial journey, taxpayers are encouraged to stay informed and meet their obligations under the Income-tax Act.
It's important to emphasize that delaying or missing this last opportunity may lead to more severe penalties and complications, making the process more cumbersome and harsh. Act promptly to rectify any oversights and ensure a smoother financial path ahead
