Updated Return

Missed The Due Date For Filing your Income Tax Return?

Every year we come across several taxpayers who fail to submit their Income Tax returns within the designated timeframe or unintentionally omit reporting certain taxable income when filing their returns. Such situations can result in receiving notices from the Income Tax Authorities and encountering various related complications.

Now, what is the solution? 

To address this issue, the Finance Act 2022 has introduced a new provision, Section 139(8A), into the Income Tax Act. This section came into effect on April 1, 2022. When combined with Rule 12AC of the Income Tax Rules, Section 139(8A) offers an opportunity to submit a new return in situations where no return was previously filed or when an updated return needs to be filed. 

The CBDT vide Notification No. 48/2022, dated 29-04-2022, had notified Form ITR-U, which has to be filed with the respective ITR, to furnish an updated return. 

Who can avail this option?

Every taxpayer is entitled to file an updated return, which can be done in the following circumstances;

1. No return was filed previously.
2. Income was not reported accurately.
3. Income was reported under incorrect heads.
4. Leads to a reduction in carry-forward loss. 
5. Results in a reduction of unabsorbed depreciation.
6. An incorrect rate of tax was applied. 
7. Leads to a reduction in tax credits. 

However, such a return cannot be filed in the following circumstances

1. An updated return is a return of a loss;
2. Updated return results in lower tax liability;
3. Updated return results in or increase in the refund;
4. In case of a search initiated against the assessee;
5. Where books of account or assets etc. are requisitioned from the assessee;
6. In case a survey is conducted against the assessee;
7. Where documents or assets seized or requisitioned in case of any other person belonging to the assessee;
8. In case an updated return has already been filed;
9. In case the assessment is pending or completed;
10. In case AO has information about the assessee under specified Acts;
11. In case AO has information about the assessee under DTAA or TIEA;
12. In case any prosecution proceeding is initiated; or
13. In the case of a person or class of persons as notified by the CBDT.

Is there a time limit to Time Limit to File Updated Return?

The time limit to file an updated return is 24 months from the end of the relevant assessment year.

Is there any additional tax liability?

If the return is filed within 12 months from the conclusion of the relevant assessment year, the additional tax will be 25%. However, if the return is filed between 12 months and 24 months, the tax rate will be 50%. It is important to note that interest is applicable on the additional tax payable in both cases.

Income Tax Returns AY 2024-25

Ready to File Your Taxes?

It's that time of the year again—your Form 16 has arrived from your employer, signaling the start of tax return filing season. Whether you're eagerly awaiting a refund or dreading the tax bill, it's time to gather all your documents and file your returns before the due date.

Key Dates to Remember

Make sure to file your returns on or before the due dates specified by the Income Tax Act to avoid:

- Late Fees

- Interest Charges

- Penalties

- Notices from the Income Tax Department

You can file belated returns until December 31, 2024. If you miss this deadline, you will have to file updated returns, which we'll cover in a separate blog.

Additional Data You Will Need Besides Form 16

Here are some additional items you'll need to report, which won't be in your Form 16:

• Interest Income from Savings Accounts: This won't appear on your Form 16. Gather this data from your bank statements.

• Interest Income from Fixed Deposits or Other Deposits: Details can be found in Form 26AS, downloadable from the income tax website.

• Dividend Income: All dividends received are taxable and must be reported.

• Stock, Futures, and Options Trading: Download statements from your broker. Income from futures and options is business income, intraday trading is speculation income, and income from shares or mutual funds is either short-term or long-term capital gains, depending on the holding period.
• Sale of Immovable Property: Provide details of any land or building sales.

• Rental Income and Home Loan Interest: Report rental income, interest paid on home loans, and municipal tax receipts.

• Other Income: Include any other income received during the year.

• Deductions under Sections 80C/80D: If these aren't reflected in Form 16, make sure to include them.

Choosing the Right Form

Use the correct income tax return form based on your income type. For example, if you have capital gains, use ITR-2 instead of ITR-1. Using the wrong form or income heads will make your return defective.

Consequences of Late or Non-Filing

- Late Fee: Rs. 1,000 to Rs. 5,000 depending on your income.

- Interest: Added on the balance tax payable until you file and pay.

- Penalties: Imposed by the tax authorities.

- Notices: The last thing you want is a notice from the Income Tax Department.

Summary

- Ensure your return includes all income that needs to be reported.

- Use the correct ITR form.

- Avail all eligible deductions.

- Consider consulting a Chartered Accountant if you need assistance.

The Income Tax Department has a comprehensive view of your transactions thanks to digital payments, PAN-based reporting, and SFT reporting. Misreporting or under-reporting your income can lead to penalties, so make sure to be diligent in reporting all your income.