The recently introduced provision for allowing taxpayers to update their tax returns has seen as many as five lakh re-filings with about ₹400 crore additional tax coming in, a senior government official said on November 24.
The Finance Act of 2022 introduced a new concept of updated returns, which permitted taxpayers to update their ITRs within two years of filing, subject to payment of taxes.
New form ITR-U was made available in May this year for taxpayers to update their income tax return (ITRs) with any income or earnings that may have been skipped in the original filings for fiscal years starting 2019-20 (the assessment year 2020-21).
“So far about five lakh updated ITRs have been filed and about ₹400 crore taxes have been paid,” he said. The official said that compliance has improved substantially and even corporates are filing updated income tax returns.
“Data showed that one company has filed an updated return and the amount of tax paid is ₹1 crore. This shows that there is voluntary compliance now and people want to pay tax and stay clean,” he added.
Taxpayers filing this form, which can be filed within two years of the end of the relevant assessment year, will have to give reasons for updating the income — return previously not filed or income not reported correctly or wrong heads of income chosen or reduction of carried forward loss.
The reasons given in the form also include reduction of unabsorbed depreciation or reduction of tax credit under Section 115JB/115JC or wrong rate of tax or any other reasons given by the taxpayers.
The Budget 2022-23 has permitted taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a move aimed at helping correct any discrepancy or omissions.
A taxpayer would be permitted to file only one updated return per assessment year. The government expects collection from direct taxes (personal and corporate tax) to exceed Budget estimates of ₹14.20 lakh crore by about ₹3.30 lakh crore.
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