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Mar 06, 2026
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Updated return vs black money law: Drafting gap may trigger 30% tax and 300% penalty under Finance Bill 2026
The Finance Bill, 2026 proposes several reforms aimed at encouraging voluntary compliance-including expanding the scope of updated returns and rationalising penal consequences for small taxpayers disclosing foreign assets and income under the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026.
The updated return mechanism was first introduced through Section 139(8A) of the Income-tax Act, 1961 by the Finance Act, 2022, allowing taxpayers to file an updated return within 24 months from the end of the relevant assessment year. The time limit was subsequently extended to 48 months by the Finance Act, 2025 (effective 1 April 2025), subject to payment of additional tax ranging from 25% to 70% of the aggregate of tax and interest payable under Section 140B.
From 1 April 2026, the framework is incorporated in Section 263(6)(a) of the Income-tax Act, 2025, with additional tax payable under Section 267.
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