An individual taxpayer will now have the option to file a revised income tax return (ITR), especially in cases where by way of the detailed Annual Information Statement (AIS) introduced in November last year or otherwise, they come to know of any income which was not offered to tax earlier.
Budget 2022 has proposed that such updated ITR can be filed within a period of 24 months, from the end of relevant assessment year (AY), with additional tax payment of 25% if updated ITR is filed within 12 months and with additional tax payment of 50%, if updated ITR is filed after 12 months, but before 24 months from the end of relevant AY. This provision will help taxpayers avoid any penalty (50%-200%) for under-reporting of income and will provide impetus to trust based governance.
However, the benefit of filing the updated return will be only for those taxpayers who offer for tax on the additional income not reported to the tax authorities and not in the case of taxpayers where cases of search or survey or assessment have been initiated by the income tax department.
Rakesh Nangia, chairman, Nangia Andersen India, says the Budget is aimed at strengthening tax compliances and allowing taxpayers to voluntarily offer additional income and pay tax on the same by way of filing an updated ITR within an extended period of 24 months, from end of relevant assessment year. “This provision will help taxpayers avoid any penalty for under-reporting/ misreporting of income, albeit with payment of some additional income tax,” he says.
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For individual taxpayers, there is no change in personal income tax rates/ slabs and no additional deductions.
Surcharge on long-term capital gains
For high net worth individuals (HNIs) with income above Rs 2 crore, the Budget has provided relief in rate of surcharge for long-term capital gains (LTCG). Now, the rate of surcharge on LTCG will be capped at 15% instead of the higher surcharge rate of 25% or 37% applicable to them at present.
Sonu Iyer, tax partner and People Advisory Services Leader, EY India says the rationalisation of surcharge on LTCG by capping it at 15% across all categories of assets is a step in the right direction.
Exemption on sum received for Covid treatment
As announced by the government last year, the legislative amendment has been made in definition of ‘perquisites’ under salary, to exclude any sum paid by the employer in respect of any expenditure actually incurred by the employee on his or his family members’ treatment in respect of any illness related to Covid-19. This relief is applicable from FY 2019-20 onwards.
Moreover, financial help received from any person for treatment of any illness related to Covid-19 (without any monetary limit) or any amount received by family members of a deceased person due to Covid from the employer of deceased or any other person up to Rs 10 lakh has been excluded from definition of taxable ‘income’.