Filing of correction ITR for the past two years.

Filing Correction ITR


Filing income tax returns is of utmost importance as you can avoid added interest, and penalties, and most importantly safeguard credit if you need it in the future (in this case loans) and owing to any foreign assets if any. Accounting and tax compliance companies always recommend that you need to be vigilant in filing the tax years every year as a responsible taxpayer.

However, during filing our income tax returns, one can unknowingly make errors that can include mentioning the wrong account number, spelling mistakes of name, errors in declaring interest income and claiming the wrong deduction. It can also happen due to some unforeseen emergency in your house that you have forgotten to pay the taxes.

However, there is no reason to worry as now there is a provision to correct your income tax return if you have made an error in it. The good news is that the current income tax laws by the Indian government allow you to correct the returns if you have made any mistake.

Under section 139(5) of the Income Tax Act 1961, it allows taxpayers to correct their mistakes by filing a revised income tax return.

However, there are times when one needs to update one’s returns which allow for the taxpayers to revise or amend their ITRs within 2 years of assessment.

In this year’s budget, the Indian government has introduced a new concept of ITR-U for filing their updated income tax returns. This provision seeks to reduce the extended adjudication timelines and is based on the self-assessment of the taxpayers and will definitely be beneficial in the long term for accounting and tax services.

So what is the difference between updated and revised income tax returns?

✔      An updated return can be filed even if you have not filed the original return while the same cannot be applied in the case of a revised return. You need to file the original return while filing a revised return.

✔      If you have an additional tax liability, then you need to file an updated income tax return. A revised return has no such limitations.

✔      While filing a revised return, carries no penalties, an updated return carries a penalty of 25-50% of the tax liability.

We take a look in detail individually at what does it mean to file a revised income tax and an updated income tax?

Revised income tax-

●       A revised income tax return allows for the rectification or the omissions of the facts which are filled at the time of filing your original ITR. In simple words, filing a revised return is filing your return again this time with the correct information.

●       In the Budget for the year 2021, the Indian government made a provision to file a revised income tax return in a span of 3 months. From the financial year 2020-21, the last date for filing a revised income tax return is December 31 of the relevant assessment year.

●       One more thing to note is that there is no limit to filing the revised income tax return. However, once you file a revised return you also need to submit the original return.

Updated Income tax return-

An updated income tax return is filed when your income was not reported correctly; you had chosen the wrong heads of income, there was a reduction of carried forward loss, there was a reduction of unabsorbed depreciation, or there was a wrong rate of tax calculation.

●       It comes under the section 115JB/115JC. It can be filed within 2 years of the end of the assessment year and it was notified on 29th April in the year 2022 of the Budget.

●       Unlike the revised income tax provision, you will be able to file an updated ITR only once.

●       If you have failed to file an income tax return for the financial year 2019-2020 you can file the same.

●       However, it would help if you kept in mind you cannot file a NIL return or claim an increased return or for any reduction in terms of tax liability.

 As an accounting and tax compliance services consultancy in Pune, Digilekha recommends you be aware of the various tax filing norms noted down by the Indian government. We would be happy to assist you in your journey toward filing the right income tax returns. Contact us on 727678478 or email us your requirements at office@digilekha.com

 

 

 

 

 

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