Insertion of new section 140B

Section 140B of the Income-tax Act sets the manner of computing tax on an updated return filed under Section 139(8A). The taxpayer pays regular tax, interest under Sections 234A, 234B and 234C, and an additional income tax computed as a percentage of the aggregate tax and interest payable. The percentage rises the later the updated return is filed. ITR-U cannot be used to reduce income, claim a refund, or where search, reassessment or specified information-exchange proceedings are pending. Earlier filing means lower additional tax.

Mayank Wadhera

Published: 16 Apr 2022

Updated: 16 May 2026

4 min read

Section 140B of the Income-tax Act, inserted alongside the updated return regime in Section 139(8A), continues to be central to voluntary tax compliance in AY 2026-27 and AY 2027-28. After Union Budget 2026 expanded the updated return window, more taxpayers are using ITR-U to regularise past omissions. Understanding the tax-and-additional-payment math under Section 140B is essential to avoid surprises.

What Section 140B governs

Section 140B prescribes the manner of computation and payment of tax on an updated return filed under Section 139(8A). It applies to every person who has either filed a return previously or has not filed one at all but is now choosing to file an updated return. The provision computes the total tax payable as the regular tax and interest plus additional income tax calculated as a percentage of aggregate tax and interest.

Additional income tax slab under Section 140B

The additional income tax escalates with how late the updated return is filed. Filings made within twelve months from the end of the relevant assessment year attract a lower additional charge, while filings made later attract a higher one. Post Budget 2026, the slab structure was rationalised to reward earlier voluntary correction. Confirm the prevailing percentages on the income-tax portal before computation.

Step-by-step payment computation

Compute total income disclosed in the updated return
Calculate tax on that income at applicable slab or special rates
Add interest under Sections 234A, 234B, and 234C as relevant
Reduce TDS, TCS, advance tax and self-assessment tax already paid
Apply the additional income tax percentage on aggregate tax and interest payable
Pay the total via Challan ITNS-280 with the correct minor head for self-assessment
File ITR-U attaching proof of payment

When ITR-U cannot be filed

Where the updated return shows a loss or reduces an earlier-declared income
Where it reduces tax liability or increases the refund determined originally
Where search, survey or prosecution proceedings have been initiated
Where assessment, reassessment or revision is pending for that year
Where the Assessing Officer has information under specified information-exchange provisions

Practical use cases for taxpayers

Common situations include disclosing foreign income missed earlier, regularising capital gains from share or crypto transactions reported in AIS, declaring rental or interest income flagged in Form 26AS, and correcting depreciation or business-expense claims. Section 140B converts these post-filing realisations into a structured catch-up rather than an open-ended litigation risk.

Worked example for AY 2026-27

Consider a salaried taxpayer who missed declaring ₹2,00,000 of bank fixed-deposit interest in the original AY 2026-27 return. The additional tax payable in slab terms is, say, ₹62,400 (including cess). Add Section 234B and 234C interest of around ₹6,000. The aggregate of tax and interest is ₹68,400. If filed within twelve months of the AY end, additional income tax under Section 140B applies at the lower notified slab; if filed later, the higher slab applies. The total payment is made via Challan ITNS-280 before ITR-U submission.

Interaction with AIS and TIS

Most Section 140B filings are triggered by AIS or TIS entries that the taxpayer overlooked — bank interest, mutual fund redemption, dividend, property registration, or foreign remittance. The AIS feedback facility lets you accept or contest each entry. Where contested entries are upheld, an updated return becomes the cleanest way to regularise. Tracking AIS proactively in October each year creates a buffer to make Section 140B filings at the lower additional-tax slab rather than the higher one.

Pre-filing checklist for ITR-U

Identify omitted income with documentary evidence
Recompute total income, tax, and Section 234A/B/C interest
Apply the current Section 140B additional tax slab
Pay total dues via Challan ITNS-280 with self-assessment minor head
Reconcile with AIS, TIS, and Form 26AS
File ITR-U on the e-filing portal within the extended window
Retain all working notes for assessment

Common errors in ITR-U filings

Filing ITR-U to claim refund — not allowed
Forgetting to pay self-assessment tax before filing the form
Missing the Section 234A/B/C interest computation
Choosing the wrong assessment year in the ITR-U utility
Filing for a year where reassessment is already pending
Skipping reconciliation with AIS for the relevant year

Conclusion

Section 140B has become the workhorse provision for clean-up compliance under the Income-tax Act. If you find an omission in your AY 2026-27 or earlier returns, model the additional tax payable, file Challan ITNS-280, and submit ITR-U well before the longer outer limit lapses. Earlier filings save material additional tax under the rationalised 2026 slab.

Frequently Asked Questions

What is Section 140B of the Income-tax Act?

Section 140B prescribes how tax is computed and paid on an updated return filed under Section 139(8A). It adds an additional income tax over and above regular tax and interest, with the percentage rising the later the updated return is filed within the extended window.

Can I file ITR-U to claim a refund?

No. ITR-U cannot be used to reduce income, declare a loss, increase a refund, or decrease tax liability already determined. It is meant strictly for voluntary additional disclosure of income that was not reported correctly in the original or revised return.

How is the additional tax under Section 140B calculated?

Compute the regular tax on the updated income, add interest under Sections 234A, 234B and 234C, subtract taxes already paid, then apply the prescribed additional tax percentage on the aggregate tax and interest. The result is paid via Challan ITNS-280 before filing ITR-U.

Who cannot file an updated return under Section 139(8A)?

Taxpayers cannot file ITR-U where search, survey, or prosecution proceedings are initiated, where assessment, reassessment, or revision is pending, where the return reduces tax or increases refund, or where the Assessing Officer holds specified information about that year.