• Notification Date: 03.02.2022
• Notification No: N/A

Income Tax Rules get tightened in Budget 2022

Income tax filing norms have become tightened for the regular taxpayers in Budget 2022. The taxpayers will be able to file their updated tax returns if they do not disclose the same in the first return. The taxpayers are allowed to update their tax return file within two years from the end of the relevant assessment year. They need to pay the additional tax in that case. The additional tax will be imposed on additional income while updating the ITR.

The taxpayers will be provided time till December 31 of the particular financial year to file their income tax return file. But several taxpayers may find it difficult to make the filing within the due date. To make the job easier for them, the new Income tax law has extended the period for returning the file.

A sub-section (8A) was proposed to be introduced to Section 139 under the Income Tax Act, 1961 by the Union Budget 2022. This proposal was made to allow the taxpayers to have more time to file their income tax returns. In the case of late filing, an additional 25 per cent of tax will be imposed on the taxpayers. The Budget had also proposed to charge an additional 50 per cent charge if the tax is paid within two years but the deadline of one year gets crossed. The additional tax will be charged on the additional income in the updated tax file return. This facility will not be available for the taxpayers if a lesser income tax liability is obtained from the updated tax file returns, or if it leads to a lesser income tax refund from the actual tax.

This new income tax law will be helpful for the taxpayers to avoid penalties that are charged due to misreporting or under-reporting of the income tax returns. The Budget Memorandum states that “The proposal for updated return over a period longer than that is provided in the existing provisions of Income-tax Act would, on the one hand, bring the use of huge data with the IT Department to a logical conclusion resulting in additional revenue realization and on the other hand, it will facilitate ease of compliance to the taxpayer in a litigation free environment”.