Here is what you need to know about filing a belated tax return.
What is belated ITR?
An income tax return filed after the due date under section 139 (4) of the Income-tax Act, 1961 is called a belated ITR.
What is the last date for filing belated ITR?
As per the amendment announced in Budget 2021, the time limit allowed for filing belated ITR has been reduced by three months. Now, a belated return can be filed at any time before three months prior to the end of the relevant assessment year or before completion of assessment, whichever is earlier.
Till FY 2019-20 (AY 2020-21), an individual could file the belated ITR till March 31 of the assessment year. However, effective from FY 2020-21 (AY 2021-22), the belated ITR can be filed till December 31 of the assessment year. Hence, for FY 2021-22, an individual taxpayer now gets 5 months (December 31, 2022) after the expiry of due date of filing ITR (July 31, 2022) instead of 8 months (March 31, 2023) earlier.
What is the penalty amount in filing belated ITR?
Till FY 2019-20 (AY 2020-21) there was a two-tier structure. If the belated ITR was filed after expiry of deadline (July 31) but on or before December 31, then late filing fee of Rs 5,000 was applicable. If the ITR was filed between January and March, then a late filing fee of Rs 10,000 was applicable. A consequent amendment was made in section 234F due to reduction in time limit for filing belated ITR.
Therefore, now as per current rules, an individual will be required to pay a late filing fee of Rs 5,000 if belated ITR is filed. For small taxpayers whose total income does not exceed Rs 5 lakh, then late filing fee will not exceed Rs 1,000.
What are the benefits lost while filing belated ITR?
Apart from paying a late filing fee of up to Rs 5,000, an individual will have to forgo other benefits as well. Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, “If an individual misses the due date of filing ITR and later on files belated ITR, then he/she will not be eligible to carry forward losses (except loss under the head – Income from house property). Losses under the following income heads cannot be carried forward, if belated ITR is filed:
i) Income from business and profession including speculation business,
ii) Income from capital gains,
iii) Income from other sources.”
Further, if there are any unpaid taxes at the time of filing ITR, then penal interest will be levied as well. Wadhwa says, “Penal interest will be levied under section 234A if self-assessment taxes are due.
Can a belated ITR be revised later if a mistake is discovered?
After filing belated ITR, if a mistake has been discovered, then an individual taxpayer can revise the belated ITR. However, do note that the last of filing belated ITR and revised ITR is the same, i.e., December 31 of the relevant assessment year.
Therefore, if you file your belated ITR for FY 2021-22 (AY 2022-23) on December 31, 2022, then you might not get the opportunity to file a revised return as the deadline for filing the same also expires on December 31, 2022.
What to keep in mind while filing belated ITR?
If you are filing belated ITR, then you will need to fill and file it using the applicable ITR form notified for the assessment year. The relevant assessment year for a financial year is the immediate succeeding financial year.
Thus, while filing belated ITR for FY 2021-22, the relevant assessment year is 2022-23. An individual taxpayer must use ITR forms notified for AY 2022-23 to file belated ITR.