According to a government official, a taxpayer will be allowed to submit just one revised return every assessment year. CBDT Chairman JB Mohapatra, speaking at a CII event, said that the purpose of this provision is to assist persons who have truly missed submitting their taxes. According to Mohapatra, such taxpayers “may only submit one revised return for one assessment year.”
If the amended ITR is submitted within 12 months, an extra 25% of the necessary tax and interest must be paid, while if it is filed after 12 months but before 24 months from the end of the relevant Assessment Year, the rate will increase to 50%.
Proposals for personal taxes in Budget 2022 and how they would affect taxpayers
The levy on long-term profits from certain capital assets would be restricted at 15%. Even as it cracks down on getting away with concealed income, the Budget allows taxpayers the opportunity to amend errors made in declaring income when submitting taxes.
The restriction on surcharge rates is anticipated to favour NRI investors and international money. Startups have long hoped for a reduction in the tax on capital gains from unlisted shares. It will help people who own unlisted company ESOPs. The rationalization of the long-term capital gains surcharge rate will stimulate investments in capital assets. However, the idea would only help people with an annual income of more than Rs 2 crore, since the surcharge on income below that threshold is currently 15%.
The Budget also aimed to provide taxpayers with the chance to correct problems connected to income misreporting when completing their income tax returns for the year. It has made it possible for these taxpayers to submit an amended return within two years after the end of the relevant assessment year. This is true regardless of whether the taxpayer has already submitted a return for the relevant assessment year. Only after payment of a 25 percent or 50 percent extra tax on the tax due on the additional income given will the amended return be permitted to be filed.
Individuals currently have until December 31 of the relevant assessment year to submit an amended ITR. The new return filing provision is far better than the old one, with a maximum time limit of two years till the end of the assessment year. Currently, if the income tax authority discovers that the assessee has failed to report certain revenue, it must go through a long adjudication procedure. Instead, under this approach, the taxpayers will be trusted to report any income that they may have missed out on when completing their tax return.
Due to ignorance or otherwise, the tax filer may fail to disclose some income, but this is reflected in the Annual Information Statement. This results in a notification to the taxpayer, who must then go through a long appeal procedure. This new provision will relieve the taxpayer’s burden and provide enough time to correct the tax return without facing penalties.
However, there are certain additional requirements that must be met in order to submit updated income tax returns. According to the Memorandum to the Budget, the amended ITR should not result in a reduction in income tax due or a refund of income tax.
In addition, as a deterrent to tax fraud, the Budget stipulates that no loss may be offset against hidden income discovered during search and survey activities. This is in reaction to instances when individuals or corporations offset brought-forward losses against undeclared income discovered during search operations. With this rule in place, such persons will no longer be able to avoid paying taxes. Some entities were discovered to be utilizing company losses as a shield to avoid forfeiture of funds. This clause puts an end to the debate.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.