No more reopening, re-assessment of old ITR beyond 3 years if escaped income is below Rs 50 lakh
July 23, 2024
Synopsis
Re-Assessment of Old ITR: Budget 2024 has brought significant relief as tax authorities are no longer allowed to reopen old income tax returns (ITR) beyond the specified time limits.
Budget 2024 has introduced a significant relief, as tax authorities can no longer reopen old income tax returns (ITR) beyond the specified time limits.
Finance Minister Nirmala Sitharaman said while presenting Budget 2024, "I propose to thoroughly simplify the provisions for reopening and reassessment. An assessment hereinafter can be reopened beyond three years from the end of the assessment year only if the escaped income is Rs 50 lakh or more, up to a maximum period of five years from the end of the assessment year. Even in search cases, a time limit of six years before the year of search, as against the existing time limit of ten years, is proposed. This will reduce tax-uncertainty and disputes."
“One of the far-reaching changes is the reduction in time limit for re-opening of the assessments” says Suresh Surana, a Chartered Accountant.
For instance, if the escaped income in financial year 2023-24 is below Rs 50 lakh for which ITR has been filed in AY 2024-25 then tax authorities can not reopen this case or reassess the ITR after 31 March 2028. Even if the escaped income is above Rs 50 lakh the reopening of the case or reassessment of the ITR can not happen beyond 5 years after the end of the assessment year in which ITR is filed. So in previous case if the income is above Rs 50 lakh the case can not be reopened or reassessed after 31 March 2030.
"The re-haul of re-opening proceedings by reducing the time limit to re-open assessments where the income escaping assessment is more than 50 lakhs, from 10 years to 5 years is also a measure towards avoiding long drawn litigations," says Sanjay Sanghvi, Partner, Khaitan & Co.
Even in search related ITR cases the time limit for reassessment or reopening of the case can not go beyond 6 years after the end of the assessement year in which the ITR was filed.
[The Economic Times]
