Tax payers can now file updated returns within two years to correct errors
Finance Minister Nirmala Sitharaman on Tuesday gave a one-time window to taxpayers to correct any discrepancy or omissions in their ITRs within two years of filing, subject to payment of taxes.
In her 2022-23 Budget speech, the Minister said this is an "affirmative step in the direction of voluntary tax compliance."
Currently, if the IT department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication, and the new proposal would repose trust in the taxpayer.
"To provide an opportunity to correct such errors, I am proposing a new provision permitting taxpayers to file an Updated Return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year," Sitharaman said.
The Minister said that the I-T Department has established a robust framework of reporting taxpayers' transactions and some taxpayers may realize that they have committed omissions or mistakes incorrectly estimating their income for tax payment.
"Instead, with this proposal now, there will be a trust reposed in the taxpayers that will enable the assessee herself to declare the income that she may have missed out earlier while filing her return," she said.
Besides, rationalising the surcharge regime, Sitharaman said, she proposes to cap the surcharge on long-term capital gains arising on transfer of any type of assets at 15 per cent. This step will give a boost to the startup community, she said.
Currently, the long-term capital gains on listed equity shares, units etc are liable to a maximum surcharge of 15 per cent, while other long-term capital gains are subjected to a graded surcharge, which goes up to 37 per cent.
Nangia Andersen India Chairman Rakesh Nangia said this is going to greatly improve the investor sentiment, fuelling investment in the capital market, resulting in economic growth.