Filing an income tax return (ITR) is a vital annual responsibility for every responsible citizen, allowing taxpayers to claim refunds for excess tax paid/deducted during the financial year. The deadline for filing ITR for the financial year 2022-2023 (assessment year 2023-2024) is fast approaching, ending on July 31, 2023. Taxpayers who haven’t filed yet must do so promptly to avoid penalties.
The Income Tax Department has been issuing reminders to ensure compliance. However, if the deadline is missed, taxpayers can still file a belated ITR, subject to a penalty. For those with a total income not exceeding Rs 5 lakh, the maximum penalty for the delay is Rs 1,000. Additionally, interest at 1 percent per month is charged if there is tax to be paid, starting from the due date until the ITR is filed, as per Section 139(4) of the Income Tax Act, 1961.
The process of filing a belated ITR is the same as filing before the due date. Alternatively, taxpayers can opt for an updated return, introduced by the Finance Act, 2022. This allows a longer duration to file the return, within 24 months from the end of the relevant assessment year (subject to certain conditions), without incurring a penalty or fee. However, additional tax must be paid in accordance with Section 140B of the Income Tax Act.
An updated return should be furnished in the ITR forms notified for the respective assessment year, accompanied by form ITR-U. Failure to file ITR altogether may result in the inability to carry forward losses of the current assessment year and can lead to a penalty of at least 50 percent of the assessed tax or up to 200 percent. In extreme and high-value cases, prosecution may also be initiated. Therefore, it is crucial for taxpayers to comply with the ITR filing requirements and meet the deadlines to avoid adverse consequences.
