Missing ITR Verification Deadline Can Cost You ₹5000/- Penalty

The Central Board of Direct Taxes, via a notification, reduced the time limit for ITR verification from 120 days earlier to 30 days. The new law is effective from August 1, 2022, and will be applicable to all the ITRs filed on or after August 1, 2022. However, missing the 30-day ITR-filing deadline can cost you Rs 5000. Here’s why.

You are likely to have to pay upto ₹5000 penalty if you miss the deadline for verifying your income tax return unless you are filing belated ITR and have to pay the penalty in any case.

The income tax department has reduced the time limit for verifying ITR from 120 days from date of filing ITR previously to 30 days.

In a notification issued on July 29, 2022, the Central Board of Direct Taxes (CBDT) stated that this new rule regarding ITR verification will be effective from August 1, 2022. The CBDT notification also stated that the reduced time limit of 30 days is applicable to ITRs filed on or after August 1, 2022.

do not miss the itr deadline

For individuals who have filed ITRs on or before July 31, 2022, the time limit to verify continues to be 120 days.The latest notification by CBDT also states that if an individual verifies the ITR after 30 days (i.e., the new time limit), then in such cases the date of e-verification/ITR-V submission shall be treated as date of furnishing the return of income. Further, all the consequences of late filing of return under the Income-tax Act, 1961 will apply including the penal consequences as well.

A penalty of Rs. 5,000 is levied if the return is filed after the due date but before 31st December 2022,” says Deepak Jain, Chief Executive, TaxManager.in a tax e-Filing and Compliance Management Portal.

Taxpayers failing to file ITR for 2022-23 by July 31, 2022, may still file the returns by December 31, 2022, but will have to pay a fine along with interest on any unpaid taxes for the year 2021-22. “In case of failure to file ITR by the due date, you can file the belated return by 31st December 2022.

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7 steps to a simple income tax return filing

7 steps to filing your income-tax returns smoothly

For individual taxpayers and assessees other than those whose accounts are due for audit, the CBDT has extended the deadline to file FY 2020-21 income tax returns (ITRs) to December 31, 2021, from the previously extended deadline of September 30, 2021.

Returns must be filed meticulously to ensure accuracy and completeness. Any inconsistencies or holes in reporting can result in questions or tax notices from the IRS.

The entire procedure of filing returns takes place online. Furthermore, due to the demand of additional information as well as the changes in processes in the new income-tax portal, an individual may make mistakes. It’s also possible that the process will take longer than usual.

In light of the foregoing, the following are some typical errors that people should avoid while filing their ITR.

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Using correct ITR Form

The taxpayer must utilise the correct ITR form when filing the ITR. If a taxpayer files an ITR on the incorrect form, the tax department may issue a notice of defective return to the taxpayer under section 139(9) of the Act. In this case, the instructions on the form given by the tax department should be consulted in order to decide the relevant form to use depending on residency, kind of income, number of housing properties, and other factors.

For example, anyone with taxable income of less than Rs 50,00,000 (Rupees fifty lakhs) can use Form ITR-1 as long as he does not have any income from “Capital gains” or “Profits and gains of business or profession.” If you are a director of a firm or own unlisted stock, or if you own more than one residence or have agricultural income over Rs 5,000, you cannot utilise Form ITR 1.

Mentioning correct basic details

Individuals should make certain that they have the correct PAN, Aadhaar, and TAN numbers, as well as that their residential status is accurately established and stated. They should also double-check all of the information on the ITR Form before submitting the tax return.

Mention correct communication details

An individual must include accurate and up-to-date contact information, such as an email address, address, and phone number. Because the IRS has shifted to faceless assessments, all correspondence will be sent to the email address listed on the tax return.

Report all sources of income

Based on his residency status, a taxpayer must record all sources of income, including interest on fixed deposits (FDs), capital gains from the sale of mutual funds, including equity shares, and any other asset. Dividend income becomes taxable in FY 2020-21, and taxes must be paid accordingly.

All international assets and income, including overseas pensions, ESOPs, foreign bank accounts, and any benefits claimed under the Double Taxation Avoidance Agreements, should be reported by residents and ordinarily resident individuals.

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Reconciliation of income in Form 26AS

Individuals should double-check that the income recorded on Form 26AS matches the income reported on their ITR. Any discrepancy will result in the department issuing a tax enquiry. For proper return processing, the taxpayer should ensure that the tax paid facts contained in Form 26AS are appropriately mentioned in Form ITR.

Reporting income from the previous employer

If you changed employment during FY 2020-21, you must declare income from your old employer as well as income from your present employer. Additionally, the standard deduction should be limited to a maximum of Rs 50,000.

Taxpayer should ensure that active and precise bank account details (i.e. account number, IFSC code, name of the bank, etc.) are stated in case of a tax refund arising from an ITR to enable faster arrival of the refund to the taxpayer’s bank account.

E-verify ITR

Only the e-verification of the ITR filed completes the ITR filing process. To e-verify a tax return, you can use Aadhaar OTP, Net banking, Demat account, bank ATM, or just email the signed physical copy of Form ITR-V to CPC Bangalore.

To facilitate smooth e-verification of returns filed, the taxpayer must ensure that PAN and Aadhaar are linked (the deadline for connection has been extended to March 31, 2022). The Indian mobile number must also be active. Tax authorities consider the return to have been filed once the e-verification is completed.