Budget: Updated ITR can be filed within 2 years but with up to 50% fine on dues
Premium- Taxpayers cannot exercise this option if they wish to file a loss return or if the updated return reduces their tax liability or results in a refund
NEW DELHI: The government will allow taxpayers to file an updated tax return within two years from the end of the relevant assessment year, subject to payment of taxes, finance minister Nirmala Sitharaman said on Tuesday while presenting the Union Budget for 2022-23.
Currently, taxpayers are given until the end of the assessment year to file a revised return. The idea is to “facilitate ease of compliance to the taxpayer in a litigation free environment," as per the Memorandum to The Finance Bill, 2022.
Taxpayers, however, will be have to pay an additional 25-50% tax on dues if they choose to update their ITR after the end of the assessment year. A taxpayer will have to pay 25% additional tax on the aggregate of the total tax and interest accrued when the updated ITR is filed within 12 months after the end of the assessment year. The penalty will be double to 50% of the aggregate of the total tax and interest accrued if the ITR is updated between 13 months and 24 months.
“Though this provision will help taxpayers avoid any penalty for under-reporting or misreporting of income, they will have to pay additional income tax," said Shailesh Kumar, Partner, Nangia & Co LLP.
Taxpayers cannot exercise this option if they wish to file a loss return or if the updated return reduces their tax liability or results in a refund.
The Memorandum to The Finance Bill, 2022 said “The proposed sub-section (8A) of section 139 shall not apply, if the updated return, is a return of a loss or has the effect of decreasing the total tax liability determined on the basis of return furnished under sub-section (1), sub- section (4) or sub-section (5) or results in refund or increases the refund due on the basis of return furnished under sub-section (1), sub-section (4) or sub- section (5), of such person under the Act for the relevant assessment year."
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