The deadline for submitting an updated income tax return (ITR) for the financial year 2020-21 is on March 31. The provision allows taxpayers who missed filing their return for the said financial year or failed to report any income to file an updated ITR. The updated return can be filed within 24 months from the end of the relevant assessment year as per Finance ministry. Therefore, if taxpayers have missed filing ITR for FY2020-21, they can do so till March 31.
Is there a penalty or fee? There is no financial imposition on individuals wishing to furnish an updated return but they have to pay an additional tax as per Section 140B of the Income Tax Act.
When are additional taxes applicable? If the ITR-U is filed within 12 months of the end of the assessment year, a 25% additional tax on the tax dues is applicable. If it is filed within 24 months, the additional tax increases to 50%.
How to file an updated return? To file an updated return, taxpayers have to use ITR forms notified for the respective assessment year. This has to be done along with the newly-introduced form ITR-U.
How to calculate tax payable? Computation of tax payable for an updated return includes total income tax liability, tax payable, interest, late filing fees, and additional tax. Then by subtracting TDS/TCS/advance tax/tax relief from the total income tax liability, you can calculate net tax liability.
What if you fail to file ITR? In this case you will not be able to carry forward losses of the current assessment year and could face penalties ranging from a minimum of 50% to a maximum of 200% of the assessed tax. Individuals may also be subject to prosecution.
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