31st December 2022: The Last Opportunity to file Belated and Revised ITR

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31st December 2022: The Last Opportunity to file Belated and Revised ITR

Even if the tax is fully paid or even if the final tax liability of the taxpayer is less than the amount of Tax Deduction at Source (TDS), still a person may be required to file the income tax return. Companies & firms have to file the return of income even if there was no business during the year. 31st December 2022 is the last opportunity for all the taxpayers who have not filed the return for the FY 2021-22. Similarly, if there is any omission or error in the return filed for the FY 2021-22, it is also the last date to revise. Let us know about the importance of the 31st December:

Belated Income Tax Return [Section 139(4)]

Normally, the taxpayers are expected to file the income tax return within the due date. The due date for most of the categories of the taxpayers is either 31st July or 31st October.  However, those taxpayers who failed to file the income tax return within the due date are allowed little extra time with certain late fees and lesser benefits. This extra time period to file the belated return is ending on 31st December. Earlier, taxpayers were allowed to file the belated return till 31st March. However, considering the advancement of the technology and electronic mode of information availability, the time period has been reduced by 3 months to December. Belated or late filings of ITR have costs & consequences not only in terms of monetary penalty & fine but also by way of denial of various benefits & incentives:

  1. Under Section 234F of the Income-tax Act, late fee of Rs 5,000 is applicable. However, small taxpayers with a taxable income not exceeding Rs 5 lakh have to pay only Rs 1,000 as late fee. This late filing fee must be deposited before the filing of belated ITR. Interest is also payable if any income tax dues are payable @ 1% per month if self-assessment and advance tax are due while filing.
  2. If taxpayers have incurred a loss during any year, they are allowed to carry forward such loss for set off against subsequent year income. However, this benefit of loss carry forward is available only if ITR is filed within the due date. If the ITR is filed after the due date then the benefit to carry forward the loss is lost except in respect of loss from house property. In short, the benefit of carry forward of loss is available only in respect of loss under the head “Income from House Property” in case of belated ITR.
  3. Belated Return results in denial of the benefit of deduction u/s 80HH to sections 80RRB, u/s 80IA, IB, IC, etc. Similarly, the benefit of application of income to the charitable trust is available only if the income tax return, audit report in Form No. 10B, other declarations regarding accumulation etc. are furnished within a prescribed time period. Delay in filing results in the denial of the benefit.

 

Revised Return [Section 139(5):

Not only the belated return, 31st December is also the last opportunity to revise the returns so as to rectify any error or omission in the return filed earlier. This time for revising the income tax return has also been reduced to 31st December from 31st March.  Unlike belated return, the revised return doesn’t attract any late fee.  Return can be revised any number of times without any restrictions or bar.

  

What if taxpayers miss these deadlines too?

  1. The Finance Act of 2022 has introduced the concept of “Updated Returns” to allow a longer duration to file the return of income. If taxpayers miss the last date to file belated ITRs, they can file “Updated Return”.
  2. Updated return can be filed only if it is beneficial to the income tax department. The route of updated return cannot be used by the taxpayers to claim benefits or concessions. Updated return cannot be filed if (a) it is a return of a loss or (b) has the effect of decreasing the total tax liability determined on the basis of return furnished earlier or (c) if it results in refund or (d) increases the refund due on the basis of return furnished earlier.
  3. Updated return can be filed after the end of the relevant assessment year. If taxpayers could not file any return till 31stDecember, then they will be allowed to file an updated ITR from April 1, 2023, only. For the period from 01.01.2023 to 31.03.2023, taxpayers cannot file the belated return, revised return or updated return.
  4. An updated return can be filed within 24 months from the end of the relevant assessment year subject to various terms & conditions. It can be filed even after the expiry of time limits specified for the filing of a belated return or revised return of income. Taxpayers can file the updated for the AY 2021-22 & 2022-23 till 31.03.2023 & 31.03.2024 respectively.
  5. A penalty or fee is not levied upon a person who wishes to furnish an updated return. However, they will be required to pay an additional tax in accordance with Section 140B of the Income Tax Act. The taxpayer will be liable to pay 25% of additional tax on the tax dues if ITR-U for FY 2021-22 (AY 2022-23) is filed within the first relevant assessment year i.e., between April 1, 2023, and March 31, 2024. However, if the ITR-U is filed between April 1, 2024, and March 31, 2025, then 50% additional tax on the tax dues is payable.
  6. A taxpayer must furnish an updated return in those ITR forms which were notified for the respective assessment year for which an updated return is to be furnished. Such an ITR form will be filed along with the newly notified form ITR-U.
  7. There are certain categories of taxpayers who are barred from filing the Updated Return. Taxpayers in whose case income tax raid has been carried out or where income tax survey (Other than TDS survey) has been conducted or in case any proceeding for assessment or reassessment or re-computation or revision is pending, etc are not allowed to file the updated return.
  8. An updated return can be furnished only once. If a person has already filed an updated return, it cannot file the updated return again for the same assessment year at subsequent occasions.

Conclusion:

Taxpayers may revisit the ITR already filed earlier for the FY 2021-22 & may use the option of revising income tax return if there is some omission or error. Those taxpayers who have not filed the return so far must ensure to file the belated return before 2022 ends.

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