Do not forget to file your income tax returns (ITRs) for financial year 2021-22 (assessment year 2022-23) amid the festivities of the new year if you haven't already. December 31 is the deadline for filing revised or belated ITR for FY 2021-22. The last chance for filing late returns comes with a penalty, however, no penalty will be levied on revised returns.
What to keep in mind while filing a belated ITR?
Assessees must file belated ITRs under Section 139(4) of the Income Tax Act, 1961. This process is the same as filing an ITR before the due date.
While filing belated ITRs, taxpayers must ensure that they select Section 139(4) in the tax return form and that the applicable penalty amount, penalty interest and taxes due are paid.
Under Section 234F of the Income Tax Act, a penalty of ₹5,000 is levied on assessees filing their belated ITRs. However, small taxpayers showing taxable income of up to ₹5 lakh must pay only ₹1,000 as penalty. This late filing fee must be deposited before one starts the process of filing a belated ITR. If any income tax is owed at the time of filing the late ITR, penal interest will be assessed. If self-assessment and advance tax are due at the time of filing, it is calculated at 1 percent per month.
How does a revised ITR work?
Section 139(5) of the Income-tax Act requires the filing of a revised ITR. The filing procedure is the same as it is for an original ITR.
Individual taxpayers must ensure that Section 139 (5) is selected when filling out the applicable income tax return form, and the original ITR number must be kept handy as it must be quoted in the revised ITR form when filing.
What happens if you miss filing the belated ITR by the due date?
If a taxpayer misses the deadline for filing a late ITR, she or he can file an updated ITR. This new option was announced by the government in Budget 2022. ITR-U can be filed if a taxpayer did not file returns, missed deadline for belated returns, did not declare income properly and in case of other errors like wrong date or wrong head of income.
However, ITR-U cannot be filed for a loss return or nil return, claiming a refund, or increase in the refund amount.
One can file only one updated return for each assessment year.
The updated ITR must be submitted within 24 months of the end of the applicable assessment year. So, an individual taxpayer can file an updated income tax return for FY 2021-22 (AY 2022-23) between April 1, 2023, and March 31, 2025.
ITR-U filed within 12 months from the end of relevant assessment year will draw 25 percent additional tax on tax dues plus interest while those filed within 24 months from the end of the AY will have 50 percent additional tax on tax plus interest.
Assessees may file their updated returns if they have not previously filed their ITRs and have no outstanding income tax liabilities. However, under Section 234F, the individual must pay a penalty for filing their returns late.
Failure to file an income tax return may result in prosecution under Section 276CC of the Act.
The income tax department can now easily identify non-filers of tax returns and initiate proceedings against such non-filers/defaulters thanks to the complete digitisation of all data of every entity.
The Income Tax Act requires all partnership firms, LLPs, and corporations to file an income tax return, even if the firm, LLP, or corporation is dormant and has no activity or transactions during an year.
Once the income tax return (whether late, revised, or updated) is filed, assessees can make sure of the same by verifying it within a month. The income tax department does not process an ITR that has not been verified. The department assumes that the ITR has not been filed.