Additional tax may impact voluntary updated returns

Late voluntary disclosures now come at a hefty price

- NEERAJ AGARWALA THE WRITER IS PARTNER, NANGIA & CO

THE UNION BUDGET has proposed to extend the deadline for filing updated returns from two years to four years. What does this extension hold for taxpayers?

Taxpayers are required to file their income tax returns (ITR) within four to six months from the end of the financial year. For example, for FY 2024-2025, a salaried individual must file their original ITR by July 31, 2025. However, should a taxpayer miss this deadline or discover any omissions or errors thereafter, they have the option to submit a belated or revised return.

Further, the proposed amendment not only extends the time limit for filing updated returns; it has also escalated the additional taxes on this late voluntary disclosures. Under the new proposals, an updated return filed within the first 12 months will incur an additional tax of 25%. If filed between 12 and 24 months, this rate increases to 50%. For returns filed between 24 and 36 months, the additional tax is proposed at 60%, and for those submitted between 36 and 48 months, it is set to rise to 70%.