Income Tax Return Filing
Income Tax Return
Till now, as per the Income Tax Act, 1961 (“the Act), in case any assessee finds any omission or error in the Income tax return filed for any assessment year, they have an option to revise the same within 3 months before the end of relevant assessment year or before the completion of the assessment whichever is earlier. Therefore, there was very less time available to the taxpayers to file the revised tax return. Now, the Hon’ble Finance Minister has provided some relief to the tax payers while doing their Income tax return filing.
Accordingly, now an assessee can file an updated tax return wherein such errors or omission can be rectified by paying some additional taxes. Also, such updated tax return can be filed within 2 years from the end of the relevant assessment year. Therefore, now the window for revision or filing of updated tax return is available for 2 years from the end of the relevant assessment year instead of earlier period of only 3 months.
However, such relief is not at free of cost and in order to avail such benefits, the tax payer would be required to pay additional tax and interest of 25% in case the updated tax return is furnished within 12 months and 50% in case the updated tax return is filed on or after 12 months and before 24 months.
The idea or motive behind the introduction of aforesaid provisions was that the taxpayers should be given an opportunity to themselves check the particulars of his financial transactions through form AIS and Form 26AS and in case they have omitted to show the same at the time of tax return filing, same may be shown in the updated tax return by making payment of additional taxes.
Following additional points shall be kept in mind relating to updated Income tax return:
a) This return cannot be used for reporting additional losses or decrease in the tax liability.
b) Before filing the updated tax return, additional taxes need to be paid and proof of such filing is required to be attached with the updated tax return
c) Updated tax return can be filed irrespective of the fact whether the assessee has filed the return u/s 139 or not.
Therefore, from above it may be inferred that the new provision of the Income Tax Act allowing the tax payers to rectify the error or any omission at time of tax return filing is a welcome step taken by the government of India and it will allow the tax payers to have sufficient time to voluntary disclose any income which has not been disclosed earlier. However, there is a cost associated with the same and tax payers would be required to pay additional tax and interest at the time of Income tax return filing. Therefore, both the tax department as well as the tax payers would be benefitted by such provisions.
Whether the taxpayers will really get benefited by such provisions need to be seen in future but for the time being, it is a welcome step.
