ITR filing: Taxpayers have until March 31 to update their income tax returns for the last two financial years, allowing them to correct any mistakes or omissions. This opportunity, introduced by the Finance Ministry in the Finance Act 2022, is available to those who wish to rectify their returns within two years from the end of the relevant assessment year.
For instance, individuals looking to update their return for the assessment year 2022-23, which corresponds to the financial year 2021-22, must do so by March 31, 2025. However, filing an updated return requires the payment of additional taxes, as mandated by the new provisions.
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The primary goal of the updated return provision is to reduce litigation and promote voluntary compliance among taxpayers. When tax authorities uncover instances of tax evasion, it often leads to lengthy legal proceedings. To alleviate such situations, taxpayers are now permitted to file an updated return while settling any unpaid tax.
Originally, the provision allowed a maximum of two years for filing an updated return, but this timeframe was extended to 48 months in the Union Budget 2025. This extension gives taxpayers more time to address any discrepancies in their filings from previous years, including fiscal years 2021-22 and 2022-23, with the deadline for the former being March 31, 2025.
An updated return can generally be filed under most conditions, except in certain exceptional cases. Taxpayers who filed a loss return under Section 139 (3) can also submit an updated return, but it must not be one that claims a loss. This initiative offers a chance for taxpayers to ensure compliance and accuracy in their tax filings without facing penalties or legal repercussions. It is essential for taxpayers to understand the specific conditions under which they can file an updated return to avoid complications in the future.
Certain situations render an updated return filing ineligible. If the revised income results in a lower tax liability, leads to a tax refund or a higher refund, or if the taxpayer is under investigation by tax authorities, an updated return cannot be filed. These conditions ensure that the provision is not misused and is primarily used to rectify genuine errors or omissions in tax returns. Additionally, if a tax survey has been conducted or the tax department has seized or requisitioned documents, filing an updated return is not permitted, maintaining the integrity of the tax compliance system.
The ability to file an updated return is a significant step towards encouraging transparent and voluntary compliance in tax filings. Taxpayers are advised to consider this provision carefully and act before the March 31 deadline to avoid any additional complications. Ensuring the accuracy of income tax returns not only aligns with legal requirements but also helps taxpayers maintain a clear record with tax authorities. This initiative by the Finance Ministry is expected to simplify the process for taxpayers and contribute to a more efficient tax administration system in the country.