New Delhi, Feb 1 (PTI) Finance Minister Nirmala Sitharaman on Tuesday gave a one-time window to taxpayers to correct any discrepancy or omissions in their ITRs within two years of filing, subject to payment of taxes.
An additional 25 per cent on the due tax and interest would have to paid if the updated ITR is filed within 12 months, while the rate will go up to 50 per cent if it is filed after 12 months, but before 24 months from end of relevant Assessment Year.
Currently, if the I-T Department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication, and the new proposal would repose trust in the taxpayer.
“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 2022-23 Budget speech.
This is an “affirmative step in the direction of voluntary tax compliance”, she added.
“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.
The minister said that the I-T Department has established a robust framework of reporting of taxpayers’ transactions and some taxpayers may realise that they have committed omissions or mistakes in correctly estimating their income for tax payment.
“Instead, with this proposal now, there will be a trust reposed in the taxpayers that will enable the assessee herself to declare the income that she may have missed out earlier while filing her return,” she said.
Nangia Andersen India Partner Shailesh Kumar said for individual taxpayers, the Budget does not provide any significant change, except an option to file updated/ revised ITR, especially in cases where by way of Annual Information Statement (AIS) or otherwise, they come to know of any income, which could not be offered to tax earlier.
“This provision will help taxpayers avoid any penalty for under-reporting/ misreporting of income, albeit with payment of additional income tax,” Kumar said.
As per the Budget memorandum, 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.
“The proposal for updated return over a period longer than that is provided in the existing provisions of Income Tax Act would on the one hand bring use of huge data with the IT Department to a logical conclusion resulting in additional revenue realization and on the other hand, it will facilitate ease of compliance to the taxpayer in a litigation free environment,” the memorandum said.
Besides, rationalising the surcharge regime, Sitharaman said, she proposes to cap the surcharge on long-term capital gains arising on transfer of any type of assets at 15 per cent. This step will give a boost to the startup community, she said.
Currently, the long-term capital gains on listed equity shares, units etc, are liable to maximum surcharge of 15 per cent, while other long-term capital gains are subjected to a graded surcharge, which goes up to 37 per cent.
Nangia Andersen India Chairman Rakesh Nangia said this is going to greatly improve the investor sentiment, fuelling investment in capital market, resulting in economic growth. PTI JD CS MKJ
