Simply Put: Filing returns after due date

Arpit and Sumit meet at their favorite Café on a weekend. Given that it was just a week or so after the income-tax return-filing deadline ended, an interesting conversation followed on the topic.

Arpit: Hey Sumit, you messed up. I could not file the IT returns by July 31.

Sumit: Why so?

Arpit: In my previous job, there was irregularity in the salary payments. The company did not provide the information and therefore I could not file it.

Sumit: You waited just for that? You could have filed the returns with the information you had and later revised the return.

Arpit: What, is such a thing possible?

Sumit: Of course! It is called a revised return. So, if an assessee fails to furnish any income – interest income from deposits or commits an error, with incorrect bank account and e-mail details – in the original return, then the return can be revised within a period of three months before the end of the relevant assessment year (December 31) or before the completion of assessment, whichever is earlier.

Arpit: But how do we do that?

Sumit: It is quite simple. Just log on to the Income Tax e-filing website, choose the relevant assessment year and then select new filing. Ensure that you file the details accurately and later e-verify the return. If the return is not verified, it will not be processed.

Arpit: Are we allowed to revise returns multiple times?

Sumit: There is no limit to the number of times revisions are made. But doing so frequently may attract the unwarranted attention of the Taxman.

Arpit: So, what are my options now?

Sumit: You will have to file a belated return immediately.

Arpit: What will the consequences be?

Sumit: If your income is above ₹5 lakh, then the penalty would be ₹5,000; otherwise, it would be ₹1,000. In addition to it, you cannot carry forward any losses (except loss from house property) that could be set off against gains to reduce your overall tax outgo. Even deductions under “Part C” of chapter VIA and exemptions u/s 10A and 10B are not allowed. If you are liable to pay tax, you will be charged interest of one per cent a month, which will be calculated from the day following the due date.

Arpit: Oh God! These provisions seem harsher than I had expected. Recently, I heard something about a new ITR-U. What is it?

Sumit: This form was introduced in Budget 2022. So, under section 139(8A), this return will enable the taxpayer to update his/her ITR within 24 months of the date of filing. Therefore, any person who has either furnished or not furnished an original return, belated or revised return can now revise returns of their two prior assessments.

Arpit: It seems to be a good deal. For AY 2020-21, I forgot to carry forward my equity losses. Now I will claim them.

Sumit: Well, you can’t! The provisions say that if the updated return is to report a loss or results in lower tax liability or has the effect resulting in refund or increasing the refund, then section 139(8A) will not be applicable.

Arpit: There are no loose ends, I suppose. I will file the belated return and pay the penalty then.

Sumit: Yeah. You must. Be prompt next year.

Published on

August 13, 2022

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