Window to file updated ITRs for 2019-20, 2020-21 now open; Check details here

Taxpayers who have missed filing Income Tax returns (ITRs) or want to update the same for the financial year (FY) 2019-20 -- assessment year (AY) 2020-21 -- and FY 2020-21 (AY 2021-22) can now do that by paying additional fee. Also, taxpayers can file updated returns (ITR-U) for these years if they have omitted to include any income or to declare any income by paying additional charge.

The Budget 2022-23 has permitted taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a move aimed at helping correct any discrepancy or omissions.

Taxpayers, filing returns for FY 2020-21 (AY 2021-22), will need to pay the regular tax due and interest (till date) along with an additional amount of 25 per cent of such tax and interest. For FY 2019-20 (AY 2020-21) the additional amount will be 50 per cent of the tax payable and interest.

Further, such taxpayers filing the ITR-U needs to specify any one of the following reasons for now filing the return. The reasons included are ITR previously not filed; income not reported correctly; wrong heads of income chosen; wrong rate of tax; reduction of carried forward losses or unabsorbed depreciation; reduction of minimum alternate tax and others.

However, taxpayers will be prohibited from filing this updated return of there's no additional tax outgo; a refund or increase in the refund amount; search or survey or prosecution proceedings are initiated; and assessment/reassessment/revision/re-computation is completed or pending.

"From the above prohibition imposed on filing ITR-U, it is interesting to note that a taxpayer is allowed to file ITR of past years only in case there is an additional Tax liability and not in case there is a claim for refund. A taxpayer can update the return if he has omitted to declare or under declared any income but he can’t revise and file an Updated Return, if he has overstated its income or by mistake included any income which either was not to be included or was exempt or where a taxpayer has omitted to claim any deduction permissible under the law. It may be relevant to point out that the time limit for filing a revised return (whereby a claim for deduction omitted to be made in the original return may be claimed) was initially reduced vide Finance Act, 2017 from expiry of 1 year from end of assessment year to end of assessment year," said Ved Jain, former president of Institute of Chartered Accountants of India (ICAI).

"Subsequently, this time limit was further reduced by Finance Act, 2021 from expiry of assessment year to 3 months before the expiry of relevant assessment year. Thus, a corporate taxpayer who is required to file the return by October 31 can furnish the revised return only by December 31 i.e. within 2 months. Thus, while the time to declare additional income is up to 24 months from the end of relevant assessment year, time to claim deduction not claimed earlier is merely 3 months prior to end of relevant assessment year. It would be only fair if the time for filing revised returns is also brought at par with time for filing updated returns," Jain added.