New Delhi: Though, Union Budget for 2022-2023 – proposed by Finance Minister Nirmala Sitharaman on Tuesday, has not announced any change in the income tax slab rates, the Centre, however, has given some respite to people filing their revised Income Tax Return (ITR). FM while tabling the budget announced that the revised tax filing window will remain open for two years from the year of assessment in case of less filing of tax.
“To provide an opportunity to correct such errors, I am proposing a new provision permitting taxpayers to file an updated return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year,” Sitharaman said in her Budget speech.
How much filing an updated income tax return (ITR) will cost?
“It is proposed that an amount equal to 25 per cent or 50 per cent as additional tax on the tax and interest due on the additional income furnished would be required to be paid,” said the Budget memorandum.
When disclosing such additional income, the taxpayer would be required to pay additional tax. “This offer does not come cheap. Those who wish to come clean have to pay an extra amount expressed in percentage terms of tax and interest payable at the time of furnishing the ITR if the updated ITR is furnished within 12 months (25%) or after 12 months but within 24 months (50%),”said a tax expert.
The tax expert further added that the introduction of Annual Information Return (AIS) has instilled a sense of fear in the mind of taxpayers who have been evading paying full tax. “Since the government does not have the requisite bandwidth to track and chase the taxpayers who have not fully declared their income or have not filed their ITR where the tax impact is not very significant, it has come out with a novel idea to offer the taxpayer the chance to come clean on their own but with certain additional cost by uploading an updated ITR by paying the tax within two years from the end of the assessment year before the income tax departments find it out,” he said.
While all taxpayers have the avenue of revising their tax returns in a limited window of five months from the due date of filing of tax returns, now the updated return can be filed within a period of two years from the end of the relevant assessment year. The updated return cannot be filed to report additional loss or decrease in the tax liability. The tax is required to be paid before the filing of the updated tax return and the proof to that extent is required to be attached while filing the updated return.
As per the Budget, a new provision in section 139 of the I-T Act is being introduced for filing an updated return of income by any person, whether he has filed a return previously for the relevant assessment year, or not.
