Within four months of the introduction of the updated returns scheme, over 65,000 income tax returns (ITRs) have been submitted, according to a senior government official. Simultaneously, effort is on to make normal returns filing easier from the next assessment year by adding new features.

“We have seen a good number of updated returns for the last two assessment years (AY 2020-21 and 2021-22) submitted till date,” Revenue Secretary Tarun Bajaj told 

How it works

The scheme is available for those who have already filed the return as also for those who have not filed at all. It can be filed with 25 per cent tax and interest payable if an updated return is filed in the first year and 50 per cent tax and interest in the second year.

The scheme aims to help assessees who may realise after filing the returns that they have omitted some thing or made mistakes in estimating their taxable income. Now, she can file updated returns on payment of additional tax/interest. This can be filed within two years from the end of the relevant assessment year. For AY 2020-21, one can file till end of AY 2022-23.

Cuts out litigation

Currently, if the Tax Department spots any missed income by the assessee, it goes through a lengthy process of adjudication. Instead, with this proposal, the Department will trust in the assessee’s declaration of the missed income in the earlier filing. The government says it is an affirmative step in the direction of voluntary tax compliance.

Hitherto, the law provided an additional time of five months to an individual assessee, two months to a company/auditable case and one month to an assessee who enters into an international transaction or specified domestic transactions to file belated or revised returns.

The explanatory provision of the Finance Bill, 2022 says: “This additional timeline for filing a revised/belated return may not be adequate when we factor in utilisation of huge information and data available coupled with the ‘nudge approach’ that motivates the taxpayer towards the desired objective of voluntary tax compliance, starting with filing of correct tax returns.”

More time

Accordingly, the new scheme for updated returns gives assessees more time. On the one hand, this would bring use of huge data with the IT Department to a logical conclusion resulting in additional revenue realisation and, on the other, would facilitate ease of compliance for the taxpayer in a litigation-free environment.

More changes in ITR form

Bajaj said that based on the feedback and experience on ITRs filed this year, efforts would be taken to make the process easier next year. “The AIS (Annual Information Statement) is giving us more data. So, if there is information that a person has no capital gains, he will not be required to open the page for that in the pre-filled return,” he said, adding that this will further ease the process of returns filing. More such processes will also be considered in due course.

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