Taxpayers with Unfiled Returns from Previous Years Have Options
Taxpayers Still Have Options for Filing Missing Income Tax Returns
Taxpayers who missed the deadline to file their Income Tax Return (ITR) for previous years are not entirely off the hook. They can still regularize their tax filings through the Updated Income Tax Return (ITR-U), which can be filed for preceding 4 assessment years (48 months).
Filing pending returns is crucial to avoid notices, claim refunds, carry forward certain losses, maintain loan and visa documentation, and stay tax compliant. Ignoring old returns can lead to penalties and unnecessary scrutiny later. According to tax experts, filing an updated return comes with certain limitations and additional tax liability.
Key Facts About ITR-U
| Case | Description |
|---|---|
| 1. | If an updated return has already been filed |
| 2. | For filing a nil return or loss return |
| 3. | For claiming or enhancing a refund amount |
| 4. | When the updated return results in a lower tax liability |
| 5. | If search proceedings under Section 132 have been initiated against the taxpayer |
If there's a mistake in the ITR-U, there's no provision to file a revised or corrected ITR-U. Taxpayers filing updated returns are also required to pay additional tax over and above the regular tax and interest payable. The amount increases depending on how late the updated return is filed.
For taxpayers who failed to file their ITR, another option is available: condonation of delay. A taxpayer who was unable to file ITRs within the prescribed due dates due to genuine hardship, such as prolonged illness, hospitalization, mental health issues, a family emergency, death in the family, natural calamity, or similar circumstances, may seek relief by filing a condonation of delay application.
Condonation of delay is usually applied to delays in filing suits or applications in courts in India. It is also applicable when the due date for filing an income tax return has passed and the taxpayer wants to file past returns. An application for condonation of delay to claim a refund or carry forward losses can usually be submitted within six years from the end of the relevant assessment year. However, each request is reviewed individually, and approval depends on the prescribed authority being satisfied about the genuineness of the hardship and the validity of the claim.
Read also: RBI Policy Preview: A Cautionary Wait Ahead
According to tax experts, condonation of delay is available to all categories of taxpayers, including salaried individuals, senior citizens, non-resident Indians (NRIs), and freelancers, provided the prescribed conditions are met.
Investor Takeaway
Taxpayers with unfiled returns from previous years can still regularise their tax filings through the Updated Income Tax Return (ITR-U).
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