Tax payers allowed to update their income tax returns within 2 years of relevant AY

Taxpayers will be given more time to update their income tax returns (ITR), announced FM Nirmala Sitharaman during her Budget 2022 speech. As per the announcement, “I am proposing to file an updated return on payment of additional tax for two years from the end of the relevant assessment years.” This would mean that individual taxpayers will get more time to file their updated income tax returns in case he/she has missed declaring the income at the time of filing income tax return.

Currently, an individual gets time till December 31 (unless extended by the government) to update their ITR to provide a correct picture of the income earned by him/her from various sources during the financial year. The newly proposed law will give taxpayers two years from the end of the relevant assessment year to file their correct ITR.

Ritesh Kumar, Partner, IndusLaw says, “Trust based governance as a concept is now also being introduced in the income-tax law. If the omissions and mistakes, a new provision is announced to file a updated return to revise and make payment of appropriate taxes, which can be filed within two years from the relevant assessment year. Promotes the trust based governance.”