The government has notified a new form for filing updated Income Tax returns (ITRs) for financial year 2019-20 and 2020-21, allowing taxpayers to file revised tax returns if they had missed out any income heads or filed it under wrong heads in their previous returns, reported The Economic Times.
It is vital to know that an additional 25 percent on the due tax and interest would have to be paid if the updated ITR is filed within 12 months, and 50 percent if it is filed after 12 months, but before 24 months from the end of relevant Assessment Year.
The taxpayers also have to give an exact reason for filling the updated return, wrote The Economic Times.
However, if a prosecution proceeding has initiated by issuing notice for a particular Assessment Year, taxpayers cannot avail updated return benefits in that particular year.
“The layout of the form has been kept very precise to help assessee input the relevant information easily,” said Shailesh Kumar, Partner, Nangia & Co LLP.
Earlier if either a tax payer or the income tax department discovered that some income has been missed out in a return, any updation underwent a lengthy process of adjudication, which was seen as harassment for tax payer and time consuming for the department.
In order to fix this, Finance Minister Nirmala Sitharaman announced the provision of updated tax return in this year budget, providing an opportunity to taxpayers to correct such errors.
Tax and consulting firm AKM Global Partner-Tax Sandeep Sehgal said taxpayers looking to file the same for fiscal 2019-20 will need to pay the due tax and interest along with an additional 50 per cent amount of such tax and interest.
For those looking to file for FY2020-21, the additional amount will be 25 per cent of the due tax and interest.
"An updated return is not allowed to be filed if it has the effect of showing a loss or reducing the total tax liability determined previously or resulting in a refund or increases the refund. The form requires suitable disclosures in this regard," Sehgal said.
Currently, if the I-T Department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication, and the new proposal would repose trust in the taxpayer.