Good news for domestic taxpayers: Re-assessment window has been shrunk

Re-assessment

There has been a hue and cry over the period to open an income tax file for re-assement once the returns have been processed and refunds handed over.

The Finance Minister Nirmala Sitharaman proposed simplification of reassessment, and the provisions for reopening a file.

Only high income cases can be reopened beyond three years from the end of the assessment year. If the income that escaped taxes is higher than the Rs 50 lakh only then can the file be opened for re-assessment.

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Additionally a cap has been introduced of opening the re-assessment for only up to a maximum period of five years from the end of the assessment year.

To reduce the tax uncertainty and disputes, once a case has been the search and questioning can be held for a limited six years before the year of research.

This reduces the re-assessment  window to six years from the existing time, limit of 10 years.

To further reduce the tax litigations, the Income Tax Act, 1961, will be made concise, lucid and easy to read.

This is a developing story.

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