The deadline to file an updated Income Tax Return (ITR) for the financial year 2020-21 is fast approaching, with March 31 set as the last date. This provision allows taxpayers who missed filing their returns or failed to report any income for the said financial year to rectify their submissions. According to the Finance Ministry, an updated return can be filed within 24 months from the end of the relevant assessment year, extending the opportunity for compliance.
While there is no financial penalty for individuals submitting an updated return, they are required to pay additional tax as per Section 140B of the Income Tax Act. The applicability of additional taxes varies depending on the timeframe within which the updated return is filed. If filed within 12 months of the end of the assessment year, a 25% additional tax on the tax dues is levied. This increases to 50% if filed within 24 months.
To file an updated return, taxpayers must use the ITR forms specified for the respective assessment year, in addition to the newly-introduced form ITR-U. Calculating the tax payable involves considering total income tax liability, interest, late filing fees, and additional tax, and deducting TDS/TCS/advance tax/tax relief from the total to determine the net tax liability.
Failure to file an ITR can result in the inability to carry forward losses of the current assessment year and may lead to penalties ranging from a minimum of 50% to a maximum of 200% of the assessed tax. Additionally, individuals could face prosecution for non-compliance.
As the deadline approaches, taxpayers are urged to ensure timely filing of their updated ITR to avoid financial implications and legal repercussions.
Additional taxes and penalties:
- While there is no financial imposition for filing an updated return, taxpayers are required to pay additional tax as per Section 140B of the Income Tax Act.
- Additional tax rates vary based on the timing of filing:
- If filed within 12 months of the end of the assessment year, a 25% additional tax applies.
- If filed within 24 months, the additional tax increases to 50%.
