Government Promotes Voluntary Tax Compliance Measures

Government introduced an updated return facility under Section 139(8A) of the Income-tax Act, 1961, through the Finance Act, 2022, to encourage voluntary tax compliance. This initiative aligns with the principles of “Sabka Saath, Sabka Vikas, Sabka Vishwas, and Sabka Prayas.” Taxpayers who omitted reporting correct income can file updated returns by paying additional tax, fostering trust and accountability.

From Assessment Years (AY) 2021-22 to 2024-25 (as of 28th February 2025), a significant number of taxpayers utilized this provision: 17.24 lakh updated returns were filed for AY 2021-22 with ₹1,799.76 crore in additional tax; 40.07 lakh returns for AY 2022-23 with ₹3,940.14 crore; 29.79 lakh returns for AY 2023-24 with ₹2,946.90 crore; and 4.64 lakh returns for AY 2024-25 with ₹431.20 crore in tax payments.

The Finance Bill, 2025, proposes to extend the time limit for filing updated returns from 2 years to 4 years from the relevant assessment year, giving taxpayers more flexibility to rectify omissions and comply voluntarily. This measure aims to enhance revenue collection while supporting transparent and taxpayer-friendly governance.sv

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 3742

TO BE ANSWERED ON MONDAY, MARCH 24, 2025/ CHAITRA 3, 1947 (SAKA)

ENCOURAGEMENT FOR VOLUNTARY COMPLIANCE BY TAXPAYERS

3742. SHRI CHAMALA KIRAN KUMAR REDDY:

SHRI EATALA RAJENDER:

SMT. D K ARUNA:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government is encouraging voluntary compliance and taking steps towards “Sabka Saath, Sabka Vikas, Sabka Vishwas and Sabka Prayas” and also brought in updated return facility for voluntary compliance by taxpayers who had omitted to report their correct income and the Government trust in taxpayers was proved right;

(b) if so, the details of the number of taxpayers voluntarily updated their income by paying additional tax and propose to extend the time-limit from the current limit of two years, to four years to file updated returns for any assessment year; and

(c) if so, the details thereof and the present status thereof?

ANSWER

THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

(SHRI PANKAJ CHAUDHARY)

(a) Yes, vide Finance Act, 2022, Government has introduced the provision of updated return by inserting the sub-section (8A) in the section 139 of the Income-tax Act,1961 so as to encourage voluntary compliance and taking forward the concept of Sabka Sath, Sabka Vikas, Sabka Vishwas and Sabka Prayas.

Further tax-payers have also shown the faith in government’s initiative where large number of tax-payers have filed the updated returns who had omitted to report their correct income.

(b) The total number of updated e-Returns submitted for AY 2021-22 (upto 31-Mar-2024), and AY 2022­23, 2023-24 and 2024-25 (upto 28-Feb-2025) is as following:

(c) Vide Finance Bill, 2025, Government has proposed to amend the section 139(8A) of the Income-tax Act, 1961 so that tax-payers may file updated returns up to 4 years from the relevant assessment year by paying additional income-tax. Earlier, tax-payers could file the updated returns upto 2 years from the relevant assessment year.