A new provision to file updated Income Tax returns (ITRs) within two years of the relevant assessment year was announced by Indian finance minister Nirmala Sitharaman in her budget speech on Tuesday.
The new provision will ensure voluntary tax filing and reduce litigation, said the minister. “To provide an opportunity to correct an error, taxpayers can now file an updated return within two years from the relevant assessment year," she said.
At present, an individual taxpayer gets time till December 31 (unless it is extended by the government) to update the ITR and provide a correct picture of income earned from various sources during the financial year.
Individual taxpayers will now get more time to file updated returns in case the person has missed declaring the income at the time of filing returns.
“Trust based governance as a concept is now also being introduced in the income-tax law,” said Ritesh Kumar, partner, IndusLaw. “In case of omissions and mistakes, a new provision is announced to file an updated return to revise and make payment of appropriate taxes, which can be filed within two years from the relevant assessment year. It promotes trust-based governance.”
The government has also decided to reduce the corporate surcharge from 12 per cent to seven per cent, said Sitharaman. The tax deduction limits of both central and state government employees will be increased from 10 per cent to 14 per cent to help both at par.
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