Union Budget 2022: Refile ITR within two years to fix errors

Taxpayers were expecting some relief in the Budget in the form of a change in the tax slabs or a hike in the deductions under Section 80C, 80D, or Section 24. Even as none of those expectations materialised, there were a number of benefits on other fronts.

File updated tax return

The Income-Tax (I-T) Department will introduce a new updated return, which is expected to help those taxpayers who have committed mistakes in filing their returns. They will get an opportunity to correct their error by paying additional tax and filing a new return within two years from the end of the relevant assessment. 

Says Sameer Jain, managing partner, PSL Advocates & Solicitors: “This will allow people to voluntarily disclose and pay more tax.” He adds that hopefully it will also result in reduced tax litigation.

NPS: Parity for state govt employees

The FM has proposed to increase the tax deduction limit from 10 per cent to 14 per cent on contribution to the National Pension System (NPS) account of state government employees.

At present, the central government contributes 14 per cent of the salary of its employees to NPS tier-I. This is allowed as a deduction. However, this deduction is allowed only to the extent of 10 per cent in the case of state government employees. 

“This will strengthen the social security net since all state governments will have to consider increasing their NPS contributions to 14 per cent now,” says Sumit Shukla, chief executive officer (CEO), HDFC Pension Fund.

Benefit for the differently-abled

The FM has proposed to allow payouts to the differently-abled dependants for whom their parents/guardians have bought an insurance policy during the lifetime of the latter, provided they (parent/guardian) have attained the age of 60. Until now, tax deduction to the parent/guardian was permitted only if the lump sum payment or annuity was paid on the subscriber’s (parent or guardian) death. Says Balachander Sekhar, CEO and co-founder, RenewBuy: “This will boost the sentiments of the specially-abled and their family members.”

Adds Naval Goel, founder & CEO, PolicyX.com: “The payment of annuity or lump sum to the differently-abled dependant during the lifetime of the parent/guardian will give assurance to policyholders that the purpose of the money put in an insurance policy has been fulfilled. They also won’t have to worry about claim settlement.”

Surcharge on LTCG capped

The FM has capped the surcharge on long-term capital gains (LTCG) payable at 15 per cent for all assets. Earlier, the surcharge on LTCG was capped at 15 per cent only for listed shares and units. LTCG on other capital assets could go as high as 37 per cent.

This proposal will benefit taxpayers in the higher tax slabs and those within the start-up community. Says Gopal Bohra, partner, NA Shah and Associate: “It will lead to considerable savings for taxpayers.”