Belated Return Filing

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Belated Return Filing

A. WHAT IS BELATED RETURN?

In the context of Income Tax Returns (ITR) in India, a belated return refers to a tax return that is filed after the original due date specified by the Income Tax Department. The due date for filing ITRs in India varies depending on the type of taxpayer, the source of income, and other factors, but it is typically set as July 31st of the assessment year for most individual taxpayers.

If a taxpayer fails to file their income tax return by the original due date (usually July 31st), they can still file it later. However, any return filed after the due date is considered a belated return. The Income Tax Department allows taxpayers to file belated returns within a certain period after the original due date, typically by the end of the assessment year, which is March 31st of the following year.

Filing a belated return for Income Tax in India has certain implications:

  1. Penalties: Taxpayers filing belated returns may be subject to penalties under Section 234F of the Income Tax Act. The penalty amount varies depending on the delay in filing and the total income of the taxpayer.
  2. Loss of Certain Deductions: Taxpayers filing belated returns may lose the opportunity to claim certain deductions or exemptions that are available only to those who file their returns within the original due date.
  3. Interest Charges: If there is any tax payable by the taxpayer, filing a belated return may also attract interest charges under Section 234A of the Income Tax Act, calculated from the original due date until the date of filing the belated return.
  4. Increased Scrutiny: Belated returns may undergo increased scrutiny by the Income Tax Department, which could lead to audits or assessments to ensure compliance with tax laws.

While filing a belated return provides a means for taxpayers to fulfill their tax obligations after missing the original deadline, it is generally advisable to file returns on time to avoid penalties, interest charges, and other adverse consequences. Additionally, filing on time ensures timely compliance with tax laws and regulations.

 

B. WHY SHOULD WE FILE BELATED RETURN?

Filing a belated return can be necessary or advisable in certain situations, despite the associated penalties and consequences. Here are some reasons why someone might need to file a belated return:

  1. Missed Deadline: If you missed the original deadline for filing your tax return due to unavoidable circumstances such as illness, travel, or other personal emergencies, filing a belated return allows you to fulfil your tax obligations.
  2. Unforeseen Circumstances: Sometimes, individuals may face unexpected events or situations that prevent them from filing their tax returns on time. In such cases, filing a belated return provides a way to catch up with tax compliance.
  3. Avoiding Further Penalties: While filing a belated return incurs penalties under the Income Tax Act, the penalties can accumulate if you continue to delay filing. Filing as soon as possible after the deadline can mitigate further penalties and reduce interest charges.
  4. Claiming Refunds: If you are eligible for a tax refund but missed the deadline to file your return, filing a belated return allows you to claim the refund owed to you by the tax authorities.
  5. Legal Compliance: Filing a belated return ensures that you remain compliant with tax laws and regulations. Non-compliance can lead to more severe consequences, including legal action and additional penalties.
  6. Avoiding Prosecution: Deliberately avoiding filing tax returns can lead to legal consequences, including prosecution for tax evasion. Filing a belated return, even with penalties, demonstrates your intent to comply with tax laws and may mitigate the risk of prosecution.
  7. Maintaining Financial Records: Filing a belated return helps in maintaining accurate financial records and ensures transparency in your financial affairs, which can be beneficial for future transactions, loans, or investments.
  8. Peace of Mind: Once you file a belated return and fulfill your tax obligations, you can have peace of mind knowing that you are up to date with your tax filings and compliant with tax laws.

While filing a belated return is a way to rectify missed deadlines and fulfill tax obligations, it’s important to do so as soon as possible to minimize penalties and interest charges. Additionally, consulting with a tax professional or accountant can provide guidance on filing procedures and any potential implications of filing late.

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C. STEPS INVOLVED IN FILING BELATED RETURN

Filing a belated return in India involves a process similar to filing a regular tax return, but with some additional steps to account for the late submission. Here’s a step-by-step guide on how to file a belated return for Income Tax in India:

  1. Gather Required Information: Collect all the necessary information and documents needed to prepare your tax return, including income statements, TDS certificates, investment details, bank statements, and any other relevant financial documents.
  2. Prepare the Tax Return: Use the appropriate Income Tax Return (ITR) form applicable to your income source and residential status for the relevant assessment year. You can download the required ITR form from the Income Tax Department’s e-filing website (https://www.incometaxindiaefiling.gov.in).
  3. Calculate Tax Liability: Compute your total income, deductions, and tax liability based on the information gathered. Make sure to include all sources of income and claim any eligible deductions or exemptions.
  4. Pay Outstanding Taxes: If you have any tax liabilities, including interest and penalties for filing the return late, make the necessary tax payments using the tax payment modes available, such as online banking, challan payment, or e-payment options.
  5. Fill Out the ITR Form: Complete the selected ITR form accurately and truthfully. Provide details of your income, deductions, tax payments, and any other required information as per the instructions provided with the form.
  6. Generate XML File: Once you have filled out the ITR form, generate the XML file of the completed return using the relevant option provided in the e-filing portal.
  7. Log in to the Income Tax e-Filing Portal: Log in to the Income Tax Department’s e-filing portal using your user ID, password, and date of birth or Aadhaar OTP.
  8. Upload XML File: Navigate to the “e-File” section and select “Income Tax Return” from the dropdown menu. Choose the appropriate assessment year and upload the XML file of your belated return.
  9. Verify Return: After uploading the XML file, you need to verify your return. You can verify electronically using options such as Aadhaar OTP, EVC (Electronic Verification Code), or by sending a signed physical copy of ITR-V to the Centralized Processing Center (CPC) within 120 days of filing.
  10. Acknowledgment: Once the verification process is completed, you will receive an acknowledgment confirming the successful filing of your belated return. Keep this acknowledgment for your records.

It’s important to note that filing a belated return may attract penalties under Section 234F of the Income Tax Act, depending on the delay in filing and the total income of the taxpayer. Additionally, any outstanding tax liabilities must be paid before filing the belated return to avoid further penalties and interest charges.

If you’re unsure about any aspect of filing your belated return, consider seeking assistance from a tax professional or accountant to ensure compliance with tax laws and regulations.

 

The concept of an “Updated Return” (ITR-U) under Indian income tax law was introduced to provide taxpayers with an opportunity to rectify any omissions or mistakes made in their original income tax return filings. This provision is designed to enhance voluntary compliance by allowing taxpayers to update their returns even after the deadline for filing a revised return has passed.

D. Key Features of Updated Return (ITR-U)

  1. Purpose of ITR-U:
  • The ITR-U form allows taxpayers to update their income tax returns for any omission or mistake that they identify after the original or revised return has been filed.
  • It provides a chance to declare any additional income and pay the associated taxes.
  1. Time Frame for Filing ITR-U:
  • The updated return can be filed within 24 months from the end of the relevant assessment year.
  • For example, for the financial year 2020-21 (assessment year 2021-22), the updated return can be filed up to March 31, 2024.
  1. Applicability:
  • The updated return can be filed whether or not an original return was filed previously.
  • It can be used to rectify under-reporting or non-reporting of income, wrong claims of losses, or any other discrepancies.
  1. Restrictions:
  • The updated return cannot be filed if it involves:
  • Reducing the tax liability.
  • Increasing the refund amount.
  • Filing or revising a return based on a survey, search, or requisition initiated by the Income Tax Department.
  • Assessments or reassessments that are pending or completed.
  • Involving prosecution proceedings initiated under the Income Tax Act.
  1. Additional Tax and Interest:
  • Taxpayers filing an updated return are required to pay additional tax along with interest.
  • The additional tax is calculated at 25% of the tax and interest due if the updated return is filed within 12 months from the end of the relevant assessment year, and at 50% if filed after 12 months but within 24 months.
  1. Sections Governing Updated Return:
  • Section 139(8A) of the Income Tax Act provides the legal basis for filing an updated return.
  • It stipulates the conditions, time frame, and manner in which the updated return should be filed.
  1. Penalties:
  • In addition to the tax and interest, penalties may be applicable if the updated return is found to be inaccurate or incomplete.
  • The Income Tax Department has the right to assess and verify the updated returns filed.

E. Steps to File an Updated Return (ITR-U)

  1. Preparation:
  • Gather all necessary documents, including the original or revised return, income details, deductions, and credits.
  • Calculate the additional income to be reported and the tax payable on it.
  1. Accessing the Form:
  • Log in to the Income Tax e-Filing portal.
  • Download the ITR-U form or access it through the online return filing system.
  1. Filling the Form:
  • Enter the necessary details such as the assessment year, additional income, tax computation, and reasons for updating the return.
  • Compute the additional tax and interest payable based on the new income reported.
  1. Payment of Tax:
  • Pay the additional tax and interest using the online payment facility on the e-Filing portal.
  • Ensure that the payment details are correctly entered in the ITR-U form.
  1. Submission:
  • Upload the completed ITR-U form on the e-Filing portal.
  • E-verify the return using Aadhaar OTP, EVC, or by sending a signed copy of ITR-V to the CPC, Bengaluru.
  1. Confirmation:
  • After submission, keep a copy of the acknowledgment for future reference.
  • Monitor the status of the updated return through the e-Filing portal.
Example Scenarios for Filing ITR-U
  1. Missed Income Reporting:
    • If a taxpayer missed reporting certain interest income in their original return, they can use ITR-U to include this income and pay the due taxes.
  1. Incorrect Deductions Claimed:
    • If incorrect deductions were claimed in the original return, the updated return allows rectification and proper tax payment.
  1. Additional Business Income:
    • Businesses that discovered unreported income after filing their returns can use ITR-U to declare this income.

F. FAQ on Belated Returns and Updated Returns

Belated Return

A belated return is an income tax return filed after the due date specified by the Income Tax Department. It allows taxpayers to comply with their tax obligations even if they missed the original deadline.

Any taxpayer who failed to file their income tax return by the original due date can file a belated return. This includes individuals, HUFs, firms, companies, and other entities.

A belated return can be filed before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. For example, for the financial year 2022-23 (assessment year 2023-24), the belated return can be filed up to March 31, 2024.

Yes, filing a belated return attracts a late filing fee under Section 234F of the Income Tax Act:

  • ₹1,000 if the total income is up to ₹5 lakh.
  • ₹5,000 if the total income exceeds ₹5 lakh.

Additionally, interest on any unpaid tax under Sections 234A, 234B, and 234C may apply.

Yes, a belated return can be revised if any errors or omissions are discovered after filing. The revised return must be filed within the time limits specified for filing revised returns.

  • Log in to the Income Tax e-Filing portal.
  • Select the relevant assessment year and ITR form.
  • Fill in the required details and select the option for filing a belated return.
  • Submit the return and e-verify it.

Failure to file a belated return by the deadline can result in the inability to carry forward certain losses, penalties, interest, and possible prosecution in severe cases.

Updated Return (ITR-U)

An updated return (ITR-U) is a provision that allows taxpayers to update their income tax returns within 24 months from the end of the relevant assessment year to correct any omissions or mistakes.

Any taxpayer who has made a mistake or has omitted income in their previously filed return or who has not filed a return can file an updated return. However, there are certain restrictions and conditions under which an updated return cannot be filed.

An updated return can be filed within 24 months from the end of the relevant assessment year. For example, for the financial year 2020-21 (assessment year 2021-22), the updated return can be filed until March 31, 2024.

An updated return cannot be filed if:

  • It results in a reduction of tax liability or an increase in refund.
  • It is filed after the commencement of any proceedings under the Income Tax Act, such as a survey, search, or requisition.
  • An assessment, reassessment, or recomputation is pending or completed for that assessment year.
  • The taxpayer is subject to prosecution proceedings under the Income Tax Act.

Additional tax and interest must be paid along with the updated return:

  • 25% of the additional tax and interest due if filed within 12 months from the end of the relevant assessment year.
  • 50% of the additional tax and interest due if filed after 12 months but within 24 months from the end of the relevant assessment year.
  • Log in to the Income Tax e-Filing portal.
  • Access the ITR-U form.
  • Enter the details of the original return, additional income, and compute the additional tax and interest.
  • Pay the additional tax and interest using the online payment facility.
  • Submit the updated return and e-verify it.

 No, an updated return for a particular assessment year can be filed only once.

  • Details of the original or previously filed return.
  • Proof of additional income and related documents.
  • Calculation of additional tax and interest.
  • Payment challans for additional tax and interest.

The Income Tax Department may scrutinize the updated return, and if discrepancies are found, penalties, interest, and legal consequences may apply.

Filing an updated return helps in rectifying errors, avoiding potential penalties, interest, and prosecution, and ensuring compliance with tax laws.

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