Budget 2022-23 proposed to introduce a new sub-section i.e. Sub-section 8(A) to section 139 whereby taxpayer will be provided with a benefit to file updated return within 24 months from end of relevant assessment year.
As per existing provisions, every person (including companies, firms, individual taxpayers etc.) have an obligation to file Income tax return within specified timelines ((for instance, individual (who is not required to get this accounts audited) require to submit Income tax return by 31st July of the relevant assessment year)) but just in case if a person is not able to file return within timelines, then Government still gives them a chance to file return after due date but it is to be filed within 3 months before the end of the assessment year or before the completion of assesment whichever is earlier. Here, the basic objective of this extended benefit under this provision i.e. section 139(4) to give reasonable time or we can say, a reasonable opportunity to file Income Tax return even if a person miss to file return within specified due date.
The above is the case, where assessee has not filed the return within due date, however, Tax authorities also gives an opportunity to taxpayers to correct their Income Tax return if in case a person has already submitted his Income tax return but there is an error or any omission in his return, and in such a case, a person can revise the return within 3 months before the end of relevant assessment year or before completion of assessment.
As per proposed provision, taxpayers provided with additional time to update their Income tax return. This provision would give benefit to the taxpayers, whether they have filed their VAT return or no return has been submitted. The government expects that it will not only add more revenue to the government but also it will give fair chance to the taxpayers to update their Income Tax return and also it will avoid litigation for ease of compliance.
As per proposal, amount equal to 25% or 50% as an additional tax on tax and interest due would required to be paid. It means this benefit will add additional tax cost to the taxpayers.
The important point to consider here, that this provision would not be applicable if the return is an loss return or it has an effect of decreasing the total tax liability. This means government would like to give this benefit only if it would result in additional income to the government.
Furthermore in following cases, the taxpayer would not be eligible to get the benefit of the proposed provision:
The assessee is required to pay tax due on the income and interest due. Further, assessee will be required to pay additional at the rate 25% if the assessee filed the updated return within 12 months from the end of relevant assessment year. Thereafter, if assessee filed VAT return after 12 months but within 24 months then additional tax would require to pay at the rate 50%.
Source: memo.pdf (indiabudget.gov.in)
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