The Government has proposed allowing filing of updated tax returns for up to two years.
For Example if you filed a return on December 31, 2021(AY 2021-22), then the assessment year ends on March 31, 2022 and you can file the updated return under section 139(8A) till March 31, 2024.
– It must be mentioned that an additional tax will be levied on the additional income while updating the ITR.
– An additional tax of 25% 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% 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.
Summary: Income tax return filers will be allowed to update their returns upto 2 years after the end of the relevant assessment year in case they forgot to include any income when the return was first filed. However, an additional tax of 25% to 50% on the tax and interest due on the additional income will be payable. A new sub-section (8A) in Section 139 is proposed to be introduced under the Income-tax Act 1961.
Currently, an individual gets time till December 31 (unless extended by the government) of the relevant assessment year to file a revised 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 updated ITR if he/she has missed an opportunity to file their revised return.
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