Budget 2022 tightened tax reporting standards for regular taxpayers. From now on, taxpayers will be allowed to file an updated tax return in case they did not disclose certain income to tax when filing the first return. They can update their income tax return (ITR) within two years from the end of the relevant tax year by paying an additional tax. It should be mentioned that an additional tax will be levied on the additional income when updating the ITR.
New RTI rule: what changes after the 2022 budget
Under current tax laws, an individual taxpayer has until December 31 of the relevant fiscal year to file a revised or late return. This additional time for filing the revised return may not be suitable for everyone. To encourage more people to file taxes, Budget 2022 introduced a rule to extend the late filing deadline.
Explanation of the revised tax reporting standard
Union Budget 2022 proposed to introduce a new subsection (8A) to Section 139 of the Income Tax Act 1961 to give taxpayers more time to file a tax return. revised or late income. The new law will give taxpayers two years from the end of the relevant tax year to disclose income for tax purposes if they missed it when filing the previous return.
“It is proposed to introduce a new provision in section 139 of the law for the filing of an updated tax return by any person, whether they have already filed a return for the tax year concerned or not,” says the budget memorandum.
Late/revised ITR filing: how much you need to pay
An additional tax of 25 percent per annum will be levied if taxpayers file a late return within one year of the end of the relevant tax year. The 2022 budget also proposed to charge an additional 50% tax if the filer updates their returns after one year but before two years. Additional tax is due on the tax and interest due on the additional income provided in the updated return.
It should be noted that taxpayers will not be able to use this facility if the updated return results in a decrease in income tax or a refund of income tax from the original tax filed.
New RTI filing standard: how it will help taxpayers
The proposed new law will help taxpayers avoid the penalty for under-reporting or misreporting income. “Proposing a discounted return over a longer period than provided for in the existing provisions of the Income Tax Act would on the one hand bring the use of huge data with the IT department to a logical conclusion resulting in the realization of additional revenue and on the other hand on the other hand it will facilitate compliance for the taxpayer in a litigation-free environment,” the budget memorandum states.
Explaining the new income tax rule, Sujit Bangar, founder of Taxbuddy.com, said: “The main benefit of this provision is that taxpayers will get a break from the fear of penalties and lawsuits. , as they may update ITRs to show inadvertently missed revenue for the first two. years. We must understand that if the ITR has not been filed at all during the previous year, the option to update the ITR to report the missing earnings cannot be exercised. »
Read all the latest Assembly news, breaking news and election updates here.