Budget 2022 has tightened the income tax filing norms for regular taxpayers. Now, the taxpayers will be allowed to file an updated tax return in case they have not disclosed certain income to tax while filing the first return. They can update their income tax returns (ITR) within two years from the end of relevant assessment year by paying an additional tax. It must be mentioned that an additional tax will be levied on the additional income while updating the ITR.
New ITR Rule: What Changes after Budget 2022
According to the current income tax laws, an individual taxpayer gets time till December 31 of relevant financial year to file a revised or belated return. This additional timeline for filing revised return may not be adequate for all. To encourage more people to file income tax returns, Budget 2022 introduced a rule to extend the time for filing belated return.
Revised Income Tax Filing Norm Explained
Union Budget 2022 proposed to introduce a new sub-section (8A) in Section 139 under the Income Tax Act, 1961 to allow taxpayers more time to file a revised or belated income tax returns. The new law will give taxpayers two years from the end of relevant assessment year to disclose the income to tax if they have missed it while filing the earlier return.
“It is proposed to introduce a new provision in section 139 of the Act 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 Budget memorandum mentioned.
Belated/Revised ITR Filing: How Much you have to Pay
An additional tax of 25 per cent per year will be levied if taxpayers file a belated return within a year from the end of the relevant assessment year. Budget 2022 also proposed to charge an additional tax of 50 per cent if the tax filer update the returns after a year but before two years. The additional tax is payable on the tax and interest due on the additional income furnished in the updated return.
It must be noted that taxpayers will not be able to use this facility if the updated return leads to lesser income tax liability or income tax refund from the original tax filed.
New ITR Filing Norm: How it will Help Taxpayers
The newly proposed law will help the income taxpayers to stay away from the penalty for under reporting or misreporting of income. “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 Budget memorandum mentioned.
Explaining the new income tax rule, Sujit Bangar, founder,Taxbuddy.com said, “Most important benefit of this provision is that tax payers will get respite from fear of penalties and prosecution as they can update ITRs to show inadvertently missed income for earlier two years. We need to understand that if ITR has not been filed at all in earlier year , then the option of updating ITR to report missing income cannot be exercised.”
Read all the Latest News, Breaking News and Assembly Elections updates here.
For all the latest business News Click Here
