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Budget Introduces 6-Month Window to Declare Foreign Assets, Settle Tax Disputes
The government has provided a six-month window for declaring foreign assets, during which they can be legalized with tax and penalties. Now, updated returns can be filed even if an investigation is underway. TDS will be levied on contractors of construction workers. The new Income Tax Code will come into effect on April 1st, which will result in changes to the ITR form and set new deadlines.
Several provisions have been made in the budget to reduce income tax-related disputes. The government is introducing a six-month period in which people holding assets abroad can disclose and legalize them by paying taxes.
However, now even if a departmental inquiry has commenced with regard to an individual’s ITR, that individual can file an updated return. Only those individuals can file an updated return whose departmental investigation has not commenced.
According to the budget, if someone has property or income worth Rs 1 crore located abroad and has not disclosed it to the Income Tax Department, they can be exempted from all legal action by paying 30 percent of the property's market value as tax and 30 percent as a penalty.
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If a person has already disclosed his or her foreign income to the Income Tax Department and is paying taxes, but has not disclosed his or her assets, then he or she can escape a penalty and a fine by paying only Rs 1 lakh.
Failure to submit account books and related documents to the department was previously considered a crime; now it has been removed from the category of crime. Minor mistakes will only attract a fine. If someone has not disclosed their income correctly, they can avoid departmental action by paying 100 percent tax in addition to the old tax and interest.
It has been proposed to bring contractors supplying workers to the construction sector under the scope of TDS to ensure accurate information about workers in this sector. Therefore, a TDS of one or two percent will be levied on these.
The budget stated that the Income Tax Code will come into effect on April 1st. Upon implementation of the new code, changes will be made to the income tax forms, details of which will be provided later.
ITR-1 and 2 can be filed until July 31st, but for non-audit businesses, ITR can be filed until August 31st.
