Understanding modified and revised income tax returns

Understanding modified and revised income tax returns

 

A novel idea under the Income Tax Act is an updated return, which is a move toward voluntary compliance rather than a protracted adjudication process. Regardless of whether a return of income has been filed for a particular assessment year, an assessee has the right to file an updated return for that assessment year within 24 months of the end of that assessment year to correct errors, omissions, or mistakes made while filing the original return, or to furnish income details in cases where no return has been filed previously. The first year for which an updated return can be filed is now FY 19-20.

The catch is that the taxpayer must pay an additional tax in addition to the regular amount of tax, interest, and late fines. If the revised return is filed now for the year ending March 2021, for example, an additional tax of 25% on the total tax (including interest and late fees) must be paid.

 

If the return is filed on or after April 1, 2023, an extra tax of 50% on the total tax (including interest and late fines) must be paid for the same year (FY20). This amended return window is accessible for up to 36 months after the end of the fiscal year.

 

Read More: GST receipts fell 16% in May, to Rs 1.41 lakh crore, from record highs a month before.

 

The overall tax on income could rise to 66 percent as a result of the additional taxes, but through voluntary compliance, the department’s punitive actions can be avoided. A high tax rate serves as a reminder to taxpayers to file their taxes as soon as possible. Higher taxes will be levied if you file late or incorrectly.

 

A revised return differs from an updated return. Even if the first return results in a higher refund or losses, or a lower tax liability, it can be changed. An revised return, on the other hand, cannot be filed if it increases the loss or refunds. There are no additional taxes for the updated return, which is another significant distinction, whereas updated return always comes with additional taxes. 

It’s likely that using a few images to describe the requirements of update returns will be beneficial. On August 30, 2021,

 

Arvind filed his IT return for the fiscal year ending March 2021. Now he realises that an interest payment of Rs 90,000 was not included in his tax return. Is it possible for him to file a revised tax return? Yes, he must pay the required taxes and file the return by March 2024.

Bhaskar has yet to file his IT tax return for the fiscal year 2020-21. He must record a loss of Rs 2 lakh from futures and options trading. Is he allowed to file?

No, you can’t file any revised returns that result in a refund. Similarly, if the department initiates a search or survey, an amended return cannot be filed in those situations as well. 

 

Those who are entitled to file UR returns can use Form ITR-U to file returns for the fiscal year ending March 2020 and following years. For under-reporting or misreporting of income, a penalty ranging from 50% to 200 percent can be applied under the Income Tax Act. The taxpayer can avoid or lessen the above-mentioned penalties by filing an amended return and revealing extra income.

DELAY IN TAX AUDIT DUE TO ONGOING ASSESSMENT IN SOME OTHER ACT. PENALTY U/S 271B TO BE DELETED

Penalty u/s 271B must be removed if a tax audit is delayed due to an ongoing assessment under another Act.

The assessee filed a return of income on January 6, 2016, which was inspected under Section 143. (3). Because the assessee’s total turnover/gross receipts surpassed the Rs.1 crore threshold, he was required to have his accounts audited under Section 44AB of the Act and submit the audit report before the deadline, which in this case was October 31, 2015. Because the accounts were not audited within the time limit, Ld. AO imposed a penalty of Rs.1,12,715/- under section 271B.

The sentence was upheld by CIT(A) on appeal. Assessee preferred an appeal to the tribunal after being aggrieved by the order.

The ld. AR argued before the tribunal that there was adequate cause for the audit to be delayed because the assessee was a cooperative society governed by the Tamil Nadu Cooperative Societies Act, 1983 and its rules. The society’s finances could not be audited for the relevant AY until the assessment was completed. Because the assessee society was not in charge of the matters connected to the appointment and completion of the audit under the aforementioned Act and Rules, the delay in the completion of the audit was not due to any fault on their part. As a result, this qualifies as fair cause, and the penalty was eliminated.

Related Article…

[pt_view id=”baa39696xe”]

On the other hand, the Ld. DR justified the sentence by claiming that it was imposed in conformity with the law. After hearing both parties, the ITAT determined that there was adequate cause for the late filing of the income tax return and audit. The assessee was audited under the Tamil Nadu Cooperative Societies Act, 1983, and its implementing rules.

The assessee had no control over the appointment of an auditor or the execution of the audit. It should also be highlighted that the audit was eventually finished on December 31, 2015, and the assessee promptly filed a return. As a result, ITAT removed the penalty.

Do you have to pay tax in advance? hurry up! The deadline is March 15.

Do you have to pay tax in advance?  hurry up! The deadline is March 15.

When an income is paid, taxes are usually deducted/collected at the source. However, because not all incomes are subject to TDS and the tax deducted at source may be less than the applicable slab rate, the remaining tax due must be paid in advance. Let’s look at the advance tax provisions that apply to individuals.

Who has to pay advance tax and when do they have to pay it?

Every taxpayer whose tax due, after deducting TDS and TCS, exceeds Rs. 10,000/- is required to pay advance tax in four instalments on the 15th June, 15th September, 15th December, and 15th March of the financial year, in the ratios of 15%, 30%, 30%, and 40%, respectively. Any advance tax shortfall in any of the instalments must be made up in the next instalment. So, if you haven’t made any instalments for the current year, you can discharge your whole advance tax liability by March 15th. The advance tax burden on capital gains and dividends income can be discharged in instalments due after the income is accrued.

Related Article…

[pt_view id=”baa39696xe”]

People who are subject to the presumptive scheme of taxation under Sections 44AD and 44ADA can pay their advance tax in one instalment on March 15th. If you are a senior person with no income from a business or profession, you are free from paying advance tax, which must be paid before the ITR filing deadline.

Interest is due if there is a deficiency or if advance tax is not paid.

You must pay interest of 1% each month for each delay or deficiency in advance tax. Because the next instalment is due after three months, even if you miss the due date by one day, you essentially pay interest for three months. If your advance tax debt is Rs. 1 lakh and you fail to pay the Rs. 15,000/- due on the 15th of June, you will be charged interest of Rs. 450/-, even if you pay it on the 16th of June.

advanced tax

Any advance tax paid by March 31st of the following year is likewise considered advance tax. So, if you fail to pay the advance tax instalment by the 15th of March, or if you pay it on the 15th but still have a shortfall, you can pay it by the 31st of March 2022, but you will have to pay penal interest of 1% for one month in addition to the interest you must pay for any shortfall in previous instalments.

What happens if an advance tax liability is not paid by the financial year’s end on March 31st?

If you are unable to pay the full amount of advance tax, you can pay it under the name of self-assessment tax at a cost. For non-payment or a deficiency in advance tax payment, you must pay interest at 1% per month or part of a month from April 1st of the following year until you really pay the self-assessment tax. If the shortfall does not exceed 10% of your total tax liability, no interest will be charged. This is in addition to the interest that will be charged if advance tax is not paid during the year.

How to decrease tax liability by planning your income tax.

It’s important to remember that if you don’t pay your advance tax on time, you’ll have to pay penalty interest of 1% per month from April 1st to the date of actual payment of self-assessment tax. You’ll also have to pay penalty interest if you file your ITR after the due date, which is usually July 31st for salaried and most tax payers. This interest is payable from the due date of the ITR to the actual filing date of the return. Even if you have already paid your self-assessment tax by the due date for filing your income tax return, you will be charged interest.

What happens if you pay more tax in advance than you owe?

If you pay more tax than your actual tax burden, either through advance tax or TDS, you can seek a refund for the difference, but you’ll have to file an ITR to get it. Furthermore, you are entitled to interest at a rate of 6% per annum on any excess tax paid.