Union Budget 2022-23: Taxpayers can file updated Income Tax Return within two years

Union Finance minister Nirmala Sitharaman presented the Union Budget 2022-23 in Parliament today. She proposed to permit taxpayers to file an updated return on payment of additional tax within two years from the end of the relevant assessment year.

She said this would allow taxpayers to correct any omissions or mistakes incorrectly estimating their income for tax payment. She pointed out that currently if the department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication, the new proposal would repose trust in the taxpayer. She said "It is an affirmative step in the direction of voluntary tax compliance.

Few other tax proposals: Tax Relief to Persons with Disability

Finance Minister Sitharaman announced that the government proposes to allow the payment of annuity and lump sum amount to the differently-abled dependent during the lifetime of parents/guardians, on subscribers attaining the age of sixty years. The law currently provides for a deduction to the parent or guardian when they take an insurance scheme for the differently-abled person only if the lump-sum payment or annuity is available to the differently-abled person on the death of the subscriber. Pointing out that there could be situations where differently-abled dependants may need payment of annuity or lump sum amount even during the lifetime of their parents/guardians.

Parity between employees of Central and State Government

To enhance the social security benefits of the state government employees and bring them at par with the central government employees, the finance minister has proposed to increase the tax deduction limit to 14 per cent from 10 per cent on the employer's contribution to the NPS account of State Government employees.

Scheme for Taxation of Virtual Digital Assets

Amid the phenomenon rise in the magnitude and frequency of transactions in virtual digital assets, FM Sitharaman announced that "any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent". She said that the scheme would not allow any deduction in respect of any expenditure or allowance while computing such income except the cost of acquisition. Further, she said, loss from the transfer of virtual digital assets cannot be set off against any other income. The minister also added that to capture the transaction details, the Government would also make a provision to provide for TDS on payment made about the transfer of virtual digital assets at the rate of 1 per cent of such consideration above a monetary threshold. The gift of a virtual digital asset is also proposed to be taxed in the hands of the recipient, she said.

Litigation Management

FM Sitharaman stated that a lot of time and resources are consumed in the filing of appeals that involve identical issues. And, to take forward the Government's policy of sound litigation management and reduce repeated litigation between taxpayers and the department, the Government would make a provision that if a question of law in the case of an assessee is identical to a question of law which is pending in appeal before the jurisdictional High Court or the Supreme Court, in any case, the filing of further appeal in the case of this assessee by the department shall be deferred till such question of law is decided by the jurisdictional High Court or the Supreme Court.

The stage for the Budget presentation was set by the Economic Survey stating that the government has the fiscal space to do more to support the economy that is forecast to grow at a healthy 8-8.5 per cent growth in 2022-23 fiscal.