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The recently introduced provision allowing taxpayers to update their tax returns resulted in up to five filings of additional filings with around ₹400 crore in additional tax, a senior government official said on November 24.
The Finance Law for 2022 introduced a new concept of updated declarations, which allowed taxpayers to update their ITRs within two years of filing, subject to the payment of taxes.
The new ITR-U form was made available in May this year for taxpayers to update their income tax returns (ITRs) with any income or income that may have been overlooked in the original filings for fiscal years beginning in 2019 -20 (the 2020-21 tax year).
“So far, around five lakh updated ITRs have been filed and around 400 crore in taxes have been paid,” he said. The official said compliance had improved significantly and even businesses were filing updated tax returns.
“The data showed that a company filed an updated return and the amount of tax paid is ₹1 crore. This shows that there is now voluntary compliance and people want to pay tax and stay clean,” he added.
Taxpayers filing this form, which may be filed within two years of the end of the relevant tax year, will be required to provide reasons for updating income — return not previously filed or income not reported correctly or wrong revenue leaders selected or loss carry forward reduction.
Reasons given in the form also include reduction of unabsorbed depreciation or reduction of tax credit under Section 115JB/115JC or wrong tax rate or any other reason given by taxpayers.
Budget 2022-2023 allowed taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a measure to help correct any discrepancies or omissions.
A taxpayer would only be permitted to file one updated return per tax year. The government expects collection of direct taxes (personal and corporate tax) to exceed budget estimates of ₹14.20 lakh crore by about ₹3.30 lakh crore.