Those who missed filing the belated income tax returns (ITR) by December 31 still have an option of filing updated returns.
To be able to file an updated return for fiscal year 2021-22, you need to wait until April 1, 2023. This is because an updated return can be filed once the relevant assessment year – 2022-23 in this case – comes to an end.
You can also file an updated return for 2019-20 before March 31. Confused? Let us explain in more details here.
What is an updated return?
Filing an updated income-tax return refers to the filing of a fresh return that virtually replaces the previous return filed by an assessee. The provision of updated return was introduced in the Finance Act 2022 under Subsection (8A) of Section 139.
The section provides that an updated return can be filed by any person even if such person has already filed the original, belated or revised return.
It is vital to mention that the updated return is filed on form ITR-U wherein the tax payer must state a reason for updating the return.
The form ITR-U gives multiple options to a tax payer for updating their returns. These reasons are 'return not previously filed', 'income not reported correctly', 'wrong heads of income chosen', 'reduction of carried forward loss', 'reduction of unabsorbed depreciation', 'reduction of tax credit under section 115JB/115JC', 'wrong rate of tax', and others.
When can one file it?
For the unversed, an updated return can be filed after the end of the assessment year and up to a period of 24 months from the expiry of assessment year. So, those who want to file an updated return for financial year 2021-22 can do so after the relevant assessment year (i.e., 2022-2023) comes to an end on March 31, 2023.
It is important to note that an updated return can be filed only in certain situations.
An updated return can not be filed for reporting loss or to claim refund, among other reasons.
Also, a person cannot file an updated return when a search has been initiated under section 132 or a survey has been conducted under section 133A, or a notice has been issued by the tax department, as indicated by the Income Tax Department website here.
Apart from the tax liability, tax payers are also supposed to pay a penalty. In case the assessse is filing the return in the first 12 months after the expiry of assessment year, the additional tax liability will be 25 percent of the outstanding tax. And when the return is filed after the expiry of 12 months from the end of assessment year, the penalty levied is 50 percent of tax liability.
In case of no tax liability
Not many are aware that an updated return can also be filed when there is no tax to be paid. In such a scenario, the tax department levies some fine for filing the return after the expiry of due date.
The penalty for late filing of return is paid under section 234F of the Income Tax Act.
Under this section, a tax payer needs to pay ₹5,000/ ₹10,000 if the return is filed after the due date of July 31. But when the total income of the person is lower than ₹5 lakh, the fees levied will be less than ₹1,000.