/ ITR

Release of Excel Utilities for ITR-1 &  ITR-4 for FY 2024-25

Utilities for ITR-1 & ITR-4

 

BREAKING NEW : Excel Utilities for ITR-1 & ITR-4 Now Available for AY 2025-26!

Tax Filing Season Officially Begins :

The early release of Excel Utilities for ITR-1 and ITR-4 for AY 2025-26 is a welcome step, allowing taxpayers to prepare and file their returns well ahead of time. Don’t wait for the deadline rush—start now and enjoy a stress-free filing experience. The Income Tax Department has released the Excel-based Offline Utilities for:

  • ITR-1 (Sahaj)
  • ITR-4 (Sugam)
    for Assessment Year 2025-26 (pertaining to Financial Year 2024-25). These utilities enable offline preparation and XML upload via the Income Tax e-Filing Portal.

Who Should Use These Forms?

Overview of ITR-4 & ITR-1.

ITR Form Who Can File Type of Utility Available
ITR-1 (Sahaj) Resident individuals having total income up to INR 50 lakh from:
– Salary/pension
– One house property
– Other sources (interest, etc.)
– Agricultural income up to ₹5,000		 Online and Offline
ITR-4 (Sugam) Resident Individuals, HUFs, and Firms (other than LLP) with income up to ₹50 lakh and income from:
– Business & profession computed under presumptive taxation under Sections 44AD, 44ADA, or 44AE		 Online and Offline

ITR-4 & ITR-1 Utility Mode:

  • Online filing: Directly through the e-Filing portal
  • Offline utility (JavaScript-based): Can be downloaded from the portal under “Downloads” → “ITR Utilities”

  • These utilities allow taxpayers to fill, validate, and generate their return forms offline without relying on continuous internet connectivity. Once the form is filled and validated, the tool creates a .json file that can be uploaded on the Income Tax e-filing portal. Built-in checks and validations help users minimize errors before submission.

Steps to File ITR-4 & ITR-1 Using Excel Utility

  1. Download Excel Utility from the Income Tax Portal.
  2. Fill in details: Income, deductions, TDS, bank details.
  3. Validate entries and calculate tax using utility.
  4. Generate XML file after successful validation.
  5. Upload XML on the portal under “File Income Tax Return”.
  6. E-Verify the return (Aadhaar OTP, Net Banking, DSC, or ITR-V post).

You can start preparing and filing your return for AY 2025–26 using these forms if you are eligible. Let me know if you want

  • A checklist of documents needed
  • Tax planning tips before filing
  • Help with selecting the correct ITR form
  • A comparison of new vs old tax regime based on your income
  • Documents to Keep Ready
    • Form 16/16A
    • Form 26AS, AIS & TIS
    • PAN, Aadhaar
    • Bank statements
    • Investment proofs
    • Home loan/employment rent receipts

Old vs. New Tax Regime: What to Know

  • Default Regime for AY 2025-26 is New Tax Regime
  • You can opt for Old Tax Regime if it gives more benefit (e.g., 80C, 80D, HRA, interest on home loan)
  • Form 10-IEA must be filed if opting for Old Regime
  • Common Filing Mistakes to Avoid like Selecting wrong ITR form, Entering incorrect PAN/Aadhaar/IFSC, Mismatch between reported income and Form 26AS/AIS and Not declaring interest income from savings/FDs.

Benefits of Early ITR Filing

  • Avoids last-minute portal congestion
  • Quicker processing and faster tax refunds
  • More time for error correction and rectification
  • Peace of mind and more time for financial planning
  • Improved visibility into income and tax liabilities

File Your ITR Smoothly with India Financial Consultancy Corporation Pvt Ltd

If your return is complex or you’re unsure how to proceed, choose our Online CA Support Team, which is ideal for Multiple income sources, Freelancers & consultants, GST filers, Property transactions, and NRI returns. India Financial Consultancy Corporation Pvt Ltd or similar tax service platforms can assist with:

  • Choosing the right ITR form
  • Regime comparison
  • End-to-end e-filing support
  • Document verification & TDS reconciliation

Taxpayer needed just Upload Your Form 16 : Have a Form 16? Just upload it, and we’ll do the rest. Filing is quick, secure, and accurate. Filing Your ITR for FY 2024-25 (AY 2025-26)? Do it in Just 5 Minutes—FREE on www.CAINDELHIINDI.com! Avoid penalties and technical delays—file your income tax return now on www.caindelhiindia.com Our platform is user-friendly, fast, and completely free for individual salary filers. Our tax experts are here to help: Email: singh@carajput.com  or Call/WhatsApp: 9555 555 480

/ Uncategorized

Updated ITR (ITR-U) Time Window Extended to 4 Years

ITR U update

Big Update from Income Tax Portal! As per Finance Act 2025

Taxpayers can now file an updated ITR (ITR-U) for up to 4 assessment years!  Taxpayers can now revise their returns for up to 4 assessment years—a significant extension from the earlier 2-year limit under Section 139(8A).

Who should consider filing ITR-U?

  • Missed reporting income earlier
  • Underreported income or claimed wrong deductions
  • Missed the original/belated/revised return deadline
  • Want to avoid scrutiny or penal proceedings by proactively disclosing

Currently Available for Filing: You can now file ITR-U for:

  • AY 2024-25
  • AY 2023-24

Coming Soon:

  • AY 2022-23 (Facility coming soon)
  • AY 2021-22 (Facility coming soon)

(Portal functionality will be activated shortly — keep a lookout!)

Portal functionality for AY 2022-23 and AY 2021-22 will be enabled shortly — stay tuned!

Important: The longer you delay, the more you pay in additional tax:

  • If you file the ITR-U within 12 months from the end of the relevant AY, you’ll pay 25% additional tax on tax + interest.
  • If you file between 12–24 months, it increases to 50%.
  • If filed between 24–36 months, the additional tax is 60%.
  • And if you file between 36–48 months, it shoots up to 70%!

So if you’re planning to file ITR-U for AY 2021-22 or 2022-23, be ready for high additional tax — up to 60% or 70% depending on how late you file. File ASAP once the portal opens for AY 2022-23 and 2021-22 to limit your additional tax liability and avoid further complications. Don’t wait! File early to save tax and avoid penalties

/ ITR

Comparison of ITR-U & Condonation of Delay u/s 119(2)(b)

Income tax treatment of a company's dividend

Differences Between Updated Return (ITR-U) and Application for Condonation of Delay u/s 119(2)(b):

Amendments in Budget 2025 for ITR-U 

Previously, taxpayers had 2 years from the end of the relevant assessment year to file an updated return (ITR-U). Budget 2025 extends this period to 4 years, providing more time for taxpayers to correct omissions and errors.  The extension to 4 years allows taxpayers more flexibility to rectify errors. However, the penalty structure discourages excessive delay by imposing higher additional tax for late filings. The ITR-U mechanism, introduced in Budget 2022, now becomes a stronger compliance tool under Budget 2025, helping taxpayers avoid scrutiny while regularizing past income disclosures. Revised Additional Tax Structure: The additional tax liability now increases progressively based on the delay in filing:

  • Within 12 months: 25% of the additional tax and interest due.
  • Within 24 months: 50% of the additional tax and interest due.
  • Within 36 months: 60% of the additional tax and interest due.
  • Within 48 months: 70% of the additional tax and interest due.

Comparison of Updated Return (ITR-U) u/s 139(8A) & Condonation of Delay u/s 119(2)(b).

Here are a few minor refinements for clarity and readability

Objective and Purpose Updated Return (ITR-U) & Condonation of Delay u/s 119(2)(b)

Basic Objective and Purpose ITR-U (Section 139(8A))  : Allows taxpayers to voluntarily update their income tax return if they missed reporting income or underreported earnings in previous filings. However Objective and Purpose Condonation of Delay (Section 119(2)(b)) is A relief mechanism that allows taxpayers to file an ITR after the due date if they have a valid reason for the delay.

Scope of ITR-U & Application for Condonation of Delay

  • ITR-U : Can be filed by any taxpayer (individual, company, firm, etc.) to disclose additional income that was missed earlier. ITR U Can be filed even if no original, belated, or revised return was filed. Cannot be used if:
    • It results in a refund or an increase in losses.
    • The taxpayer is under assessment, reassessment, or investigation.
    • The case involves search, survey, prosecution, or undisclosed income.
  • Condonation of Delay : Condonation of Delay : Only applies when no ITR was filed at all within the prescribed time. Condonation of Delay Requires a valid reason for the delay. Condonation of Delay Approval is at the discretion of CBDT or Principal Chief Commissioner of Income Tax (PCCIT). Unlike ITR-U, a condonation request can be used to claim a refund. Common reasons include:
    • Forgetting to file due to unavoidable circumstances.
    • Wanting to claim a refund that was missed.
    • Genuine hardship (e.g., medical emergency, natural calamities).

Time Limit for Filing of ITR-U & Application for Condonation of Delay

  • ITR-U : Current limit: 24 months from the end of the relevant AY. And in the Proposed (Budget 2025), The Budget 2025 proposes to extend this to 48 months (4 years). ITR U Increase to 48 months from the end of the relevant AY.
  • Condonation of Delay: As per CBDT Circular 11/2024 (not 5 years), the request can be made within 6 years from the end of the relevant FY.

Additional Liabilities in Filing of ITR-U & Application for Condonation of Delay

  • ITR-U: Requires payment of additional tax. The additional tax is 25% if the return is filed within 12 months and 50% if filed after 12 months but before the due date. There is no 70% rate currently applicable. However Condonation of Delay application has No additional tax, but interest u/s 234A, 234B, & 234C and penalties may apply if tax is payable.

Authorities Involved for Filing of ITR-U & Application for Condonation of Delay

  • ITR-U: Processed directly by CPC (Centralized Processing Center). And No manual approval required. If valid, it is automatically processed.
  • Condonation of Delay: Requires approval from CBDT or PCCIT before filing the return. And Decision must be made within 6 months of the application.

Practical Scenarios on Filing of ITR-U & Application for Condonation of Delay

  • Missed ITR deadline with a valid reason—correctly assigned to Condonation of Delay (Section 119(2)(b)). Use Condonation of Delay if: You failed to file your return on time due to a valid reason (such as a medical emergency or oversight) and need to seek approval before filing. However, approval is not guaranteed and depends on the taxpayer proving “genuine hardship.
  • Failed to report additional income or correct an error – ITR-U (Section 139(8A)) is the only option, as condonation is not meant for underreporting cases. You missed declaring income and want to update your return, but be prepared to pay additional tax
  • Business suffered losses and wants to carry them forward – It is correctly mentioned that ITR-U does not allow loss carry-forward. However, Condonation of Delay is correct, but the taxpayer must meet the conditions for loss carry-forward. condonation of delay allows it only if the taxpayer meets the conditions specified under the Income Tax Act.
  • Excess tax deductions and wants a refund—condonation of Delay is correct, but approval depends on the justification for late filing.
  • Willing to pay additional tax to update return quickly – ITR-U is correct, as it allows a taxpayer to voluntarily rectify errors without needing approval.

Which is more beneficial?

  • Condonation of Delay is preferable only if the taxpayer qualifies and obtains approval. Otherwise, ITR-U remains the only available option for updating income.

CBDT Extends ITR Filing Deadline for AY 2025-26 Circular No.: 06/2025

CBDT Extends ITR Filing Deadline for AY 2025-26

The CBDT has extended the due date for furnishing the Return of Income under Section 139(1) of the Income-tax Act, 1961 for Assessment Year 2025-26. Dated: 27th May, 2025, Issued by: Central Board of Direct Taxes (CBDT) Reference: F. No. 225/205/2024/ITA-II

  • Old Due Date: 31st July 2025
  • New Extended Due Date: 15th September 2025

The extension applies to assessees referred to in clause (c) of Explanation 2 to sub-section (1) of Section 139—typically individuals, HUFs, and other non-audit cases.

Reason for Extension of CBDT Extends ITR Filing Deadline for AY 2025-26 is stated as the extension is understood to be due to Revised ITR Forms. And System Overhauls and Portal Updates

/ NRI

All about ITR-U & related amendment in the Budget 2025

PROVISIONS FOR ITR FILING FOR THE AY 2021-22

Summary on the ITR-U & Amendments in the Budget 2025

Introduction: ITR-U allows taxpayers to rectify mistakes or omissions in previously filed returns, including original, belated, or revised returns under Section 139(8A) of the Income Tax Act. It serves as an option for taxpayers to ensure accurate tax filing and compliance. With the Budget 2025 amendment, the time limit for filing ITR-U has been extended from 2 years to 4 years from the end of the relevant assessment year.  Last Date to File ITR-U for FY 2023-24 (AY 2024-25): 31st March 2027

Who Can File ITR-U?

Income tax law Allowed to file ITR U if:

  • Missed filing the original return within the due date.
  • Declaring additional income not reported earlier.
  • Paying additional tax liability.

When Updated Return Can Be Filed: Purpose:

  • Failure to file on time: If the taxpayer misses the original or belated deadline. Can be filed within 24 months from the end of the relevant assessment year.
  • Mistakes or omissions: Errors or omissions in any previously filed return. Allows taxpayers to rectify errors or omissions in their previously filed returns.

When Updated Return Cannot Be Filed:

Restrictions on Filing ITR-U: Cannot file ITR-U in these cases:

  • To claim a refund or increase refund amount.
  • If no additional tax is payable (Nil return not allowed).
  • For carrying forward or increasing losses.
  • If total tax liability is covered by TDS credit.
  • Already filed ITR-U: A taxpayer cannot file an updated return for the same assessment year if it’s already been filed.
  • Tax loss or reduced liability: If the updated return would result in a tax loss or a reduction of the tax liability.
  • Increased refunds: If the updated return increases the refund amount.
  • Ongoing investigation: If a tax investigation is underway (under Sections 132 or 133A).
  • Pending or completed assessments: If an assessment or reassessment is pending or has been completed.
  • Change in ITR Form Type: If your income structure changes (e.g., ITR-1 to ITR-3 due to business income), ITR-U allows you to switch forms.

Amendments in Budget 2025 related to ITR-U:

tax filling

The window to file an ITR-U has been extended from 2 years to 4 years from the end of the relevant assessment year, giving taxpayers more time to rectify errors. This change is especially beneficial for taxpayers who need more time to correct their returns or who missed earlier filing deadlines. The revised penalties also aim to encourage quicker rectifications while still allowing a window for correction without severe punitive measures. This is a well-detailed explanation of ITR-U and the updates introduced in Budget 2025

  • Extended Deadline: Taxpayers now have 4 years instead of 2 to file an updated return.
  • Gradual Penalty Structure: Additional tax increases from 25% to 70% based on when ITR-U is filed.
  • ITR-U vs. Belated/Revised Returns – If you miss both, you can still file ITR-U but cannot claim refunds or reduce tax liability.
  • Who Can and Cannot File ITR-U – Clear differentiation based on tax compliance status, errors, and legal proceedings.
  • Last Dates – March 2025 for AY 2022-23 and March 2027 for AY 2024-25. Here’s the updated timeline for filing ITR-U:
Financial Year, Assessment Year: Previous ITR-U Deadline (2 years) New ITR-U Deadline (4 years)
FY 2020-21 AY 2021-22 31st March 2024 31st March 2026
FY 2021-22 AY 2022-23 31st March 2025 31st March 2027
FY 2022-23 AY 2023-24 31st March 2026 31st March 2028
FY 2023-24 AY 2024-25 31st March 2027 31st March 2029

Now, taxpayers get 4 years instead of 2 years to rectify their returns. Would you like a breakdown of the penalties for filing at different intervals?

Penalty Amendments:

  • Within 12 months: 25% of average tax and interest due.
  • Within 24 months: 50% of average tax and interest due.
  • Within 36 months: 60% of average tax and interest due.
  • Within 48 months: 70% of average tax and interest due.

How to strategically use ITR-U to avoid unnecessary penalties?

Type of ITR

ITR-U is useful for voluntary tax correction but comes at a cost. Plan your tax filings correctly to avoid additional penalties and interest. Cannot be used for refunds, loss carryforwards, or if no extra tax is payable.

The extension of the filing window for ITR-U and the gradual penalty structure offer taxpayers more flexibility to correct past mistakes. This will promote timely tax compliance and reduce the risk of inadvertent errors in filing returns, ensuring that tax liabilities are properly reported.

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Section 87A Rebate Restored via ITR Utility update

87A

Section 87A Rebate Restored- utility update disallowed rebate on Special Rate Income

The Income Tax Department’s announcement about the updated utilities for ITR-2 and ITR-3 incorporating Section 87A rebate provisions is a notable development, especially for taxpayers dealing with income taxed at special rates such as Short-Term Capital Gains  u/s 111A and Long-term capital gains  u/s 112.

ITR-2 & ITR-3 3 (Excel-based Utility) has been updated. However, JSON schema has still not been updated after 05.07.2024. Here are the key takeaways of Circular No. 21 (dated December 31, 2024):

TR-2 & ITR-3 3 (Excel-based Utility) has been updated

TR-2 & ITR-3 3 (Excel-based Utility) has been updated.

  • Revised Utilities for ITR-2 and ITR-3: The revised utilities are expected to simplify claiming the Section 87A rebate. These updates follow Circular No. 21 (dated December 31, 2024) and align with the Bombay High Court’s directive ensuring taxpayer rights.
  • The updated utilities for ITR-2 and ITR-3 now enable taxpayers to claim Section 87A rebate on special rate income, addressing the issue caused by the earlier disallowance on July 5, 2024. The July 5, 2024, utility update had disallowed the rebate on special rate income, causing compliance challenges for eligible taxpayers. This update rectifies that issue. The updated utilities for ITR forms 2 and 3 giving effect to the Circular No. 21 dated 31/12/24 & including the option to update 87A rebate will be made available shortly.

Section 87A rebate

  • Revised and Belated Returns: Taxpayers can file or revise their returns using the updated utilities, benefiting from the extended deadline of January 15, 2025, as per Circular No. 21.
  • Rebate under Section 87A: Available to taxpayers earning up to Rs. 5,00,000 taxable income (old regime) or Rs. 7,00,000 (new regime). Enables eligible individuals to reduce their tax liability to zero.
  • Special Rates on Income: Provisions address Short-Term Capital Gains (Section 111A) and Long-term capital gains (Section 112), ensuring rebates can be claimed even for income taxed at these rates.
  • Filing Extensions and Practical Benefits: Circular No. 21 extends the deadline for revised or belated returns to January 15, 2025, providing relief for taxpayers affected by processing delays. Income tax taxpayers with previously processed Income tax return’s showing demand must file revised returns to claim the benefits.

Big Update on Tax Rebate u/s 87A

The Income Tax Department had changed Excel Utility to Update the Rebate u/s 87A but it doesn’t means Department had allowed Rebate u/s 87A and that’s why the wording in the income tax portal were “The updated utilities for ITR Forms 2 and 3 to exercise the option to update 87A rebate for AY 2024-25 will be made available shortly.”

Pic 1
The Utility is calculating tax without giving rebate against special income as earlier but the tax payer can edit the rebate manually

The Utility is calculating tax without giving rebate against special income as earlier but the tax payer can edit the rebate manually

Pic 2
Edited the Rebate amount manually to the extent of tax

Edited the Rebate amount manually to the extent of tax

Pic 3
Screenshot of earlier utility where rebate amount was non editable

Screenshot of earlier utility where rebate amount was non editable

/ ITR

Filing Missed ITR Returns Beyond Belated Deadline

Belated Return filed u/s 139(4)

Filing a Belated Income Tax Return: Key Details

If you’ve missed the deadline to file your Income Tax Return (ITR), you can still file it as a belated return under Section 139(4). While filing the belated return, you must select Section 139(4) of the Income Tax Act.

What is a Belated Return?

A belated return is filed after the original due date (e.g., 31st July for individuals) but before 31st December of the relevant assessment year. While there are penalties, filing a belated return is better than non-compliance.

Penalties under Section 234F and interest u/s 234A may apply, depending on your tax liability and the delay in filing. Taxpayers must ensure the return is filed before 31st December of the relevant assessment year. Belated returns provide a second chance for taxpayers to comply with their obligations and avoid legal consequences for failing to file on time.

Eligibility Criteria for Filing a Belated Return

There are no specific eligibility restrictions for filing a belated return; it applies to anyone who was required to file an Income Tax Return (ITR) but failed to meet the original deadline.

Who Must File an ITR?: Filing an ITR is mandatory in the following scenarios:

  1. Income Threshold
    • Old Tax Regime: If your total income exceeds ₹2,50,000 (basic exemption limit).
    • New Tax Regime: If your total income exceeds ₹3,00,000.
      (Note: Higher exemption limits apply for senior citizens and super senior citizens.)
  2. Specified Transactions
    • You deposited more than ₹1 crore in aggregate in a current account during the financial year, including accounts with banks or cooperative banks.
    • You incurred foreign travel expenses exceeding ₹2 lakh in the relevant financial year.
    • Your total electricity consumption bills exceeded ₹1 lakh in the financial year.
  3. Other Cases
    • If you have capital gains or other taxable income, even below the basic exemption limit, and certain conditions apply.
    • To claim a tax refund, even if your income is below the taxable threshold.

Penalties and Drawbacks of Filing a Belated Return

penalty-for-late-itr-filing

  1. Interest Under Sections 234A, 234B, 234C: Interest is charged for late payment of taxes.
  2. Late Fee Under Section 234F:
    • Income up to ₹5 lakhs: ₹1,000.
    • Income above ₹5 lakhs: ₹5,000.
    • No late fee if income is below the taxable limit.
  3. Losses Cannot Be Carried Forward: Losses (except house property losses) cannot be carried forward for future adjustments.
  4. Deductions/Exemptions Disallowed: Certain deductions under Sections 10A, 10B, 80-IA, etc., are unavailable if filed after the deadline.
  5. Refund Delays: Filing late may delay any refunds due.
  6. No Revision Beyond Deadline: A belated return can be revised, but only up to 31st December of the relevant assessment year.

How to File a Belated Return?

You can file a belated return either online or offline.

Online Method:

  1. Login: Access your account on the Income Tax e-filing portal.
  2. File Return:
    • Go to “e-File” > “Income Tax Returns” > “File Income Tax Return.”
    • Select the appropriate Assessment Year (AY).
  3. Choose Section 139(4):
    • In the filing section, select 139(4) (Belated Return).
  4. Complete Filing:
    • Enter income details, claim deductions, compute tax, and submit the return.
  5. e-Verify:
    • Ensure to e-verify your return to complete the process.

Offline Method:

  1. Download Utility: Use the offline ITR preparation software.
  2. Upload JSON: After preparing the return, upload the json file on the portal.
  3. e-Verify: Finalize the process by e-verifying.

Missed Filing ITR for Previous FY ? Here’s What You Can Do

If you failed to file your Income Tax Return (ITR) within the due date for previous financial years, there are still ways to address the situation. Below are the options available:

Apply for Condonation under Section 119(2)(b)

Tax Dept provides relief for taxpayers who missed filing their ITR through a condonation request.

  • Purpose: For late filing or verification of ITR due to genuine reasons.
  • This relief is discretionary and depends on the merits of the case. Heavy penalties may still apply if the condonation is not granted.
  • Process for condonation requests:
    • Submit a condonation request via the Income Tax e-filing portal.
    • The request must include valid reasons for the delay.
    • The tax authority assesses the request and decides whether to accept it.
  • Approval for condonation requests:
    • If accepted, you are allowed to file or verify the return without penalties or additional interest.

File an Updated Return under Section 139(8A)

Updated Return (ITR-U) was introduced in Budget 2022 to allow taxpayers to Rectify errors in previously filed returns & File ITR for missed deadlines within a two-year window. Taxpayers can be filed up to 24 months from the end of the relevant assessment year.

Eligibility:

    • Taxpayers who missed filing or made mistakes in earlier returns.
    • Cannot be used if the return involves a claim for refund or results in reducing tax liability.

Filing Missed Returns Beyond Belated Deadline 

If you miss the belated return deadline (31st December):

  • File an ITR-U (Updated Return) under Section 139(8A) with an additional tax liability:
    • 25% or 50% of the tax due, depending on when the ITR-U is filed.
    • The due date for filing ITR-U is 24 months from the end of the relevant financial year.

Comparison: Condonation vs. ITR-U

Aspect Condonation (Sec 119(2)(b)) Updated Return (Sec 139(8A))
Purpose Relief for genuine delays in filing/verification. Allows rectification or missed filing.
Approval Required Yes, discretionary approval from tax authorities. No, taxpayer files directly via portal.
Deadline No fixed deadline (subject to approval). 24 months from the end of the AY.
Additional Tax No, if condonation is approved. Yes, 25-50% on due tax.
Claim Refund Yes, if approved. No refund claims allowed.

Special Circumstances for Delay

You may request a Condonation of Delay from the Income Tax Commissioner in case of:

  1. Genuine hardship.
  2. Refund due from excess tax payments.
  3. Cases of severe circumstances where filing was impossible.

Consequences of Late Income Tax Return (ITR) Filing

  • Filing your ITR after the due date can have several financial and procedural consequences, including penalties, interest, and loss of benefits. Here’s a detailed breakdown:
  • Delayed Refunds; Interest Penalty (Section 234A); Late Filing Fees (Section 234F); Loss of Carry Forward Benefits;  Restriction on Choosing the Old Tax Regime (For AY 2024-25)
  • Timely ITR filing ensures you: Avoid penalties and interest; Retain the ability to claim refunds, deductions, and exemptions;  Minimize the risk of notices and scrutiny from the tax department; Retain flexibility in choosing your preferred tax regime.

What to Do In case Assesse receive a Late Payment Notice from Tax Dept. ? 

Receiving a late payment notice can be stressful, but handling it carefully and promptly can minimize penalties and avoid further complications. Here’s a step-by-step guide to addressing the issue:

  • Review the Notice Carefully : Ensure the information in the notice, such as your name, PAN, and assessment year, is accurate. Understand the Issue: Determine whether the notice is related to unpaid taxes, penalties, or late payment of dues. Deadline: Note any response or payment deadlines mentioned.
  • Verify Your Records : Cross-check the notice with your tax records, payment receipts, and filed returns. Taxpyer Ensure that the mentioned taxes or penalties are unpaid or late. In case taxpyer has already paid, locate the Challan Identification Number (CIN) or payment receipt as proof.
  • Calculate Penalties and Interest Taxpayer must review the penalty and interest charges under Sections 234A, 234B, or 234C, if applicable. Use online calculators on the Income Tax Department’s portal for an accurate estimate. then you needed to Confirm that the amounts in the notice align with your calculations.
  • Pay the Outstanding Amount : If the notice is accurate, pay the due amount promptly through the Income Tax e-Payment Portal to avoid further interest or penalties. Save the receipt of the payment for future reference.
  • Respond to the Notice : If you find discrepancies, log in to the Income Tax e-Filing portal and respond under the ‘e-Proceedings’ or ‘e-Nivaran’ section. Attach supporting documents, such as payment proofs, to explain your case.

FAQs related to Belated Return

Q1 : Can I claim a refund with a belated return?

Ans: Yes, but ensure your bank account is pre-validated.

Q2 : What happens if I fail to file within 31st December?

Ans: File ITR-U or face penalties, notices, or prosecution in extreme cases.

Q3 :  Can losses be carried forward with a belated return?

Ans: Only losses from house property can be carried forward.

Q4 : What if my income is below the taxable limit?

Ans : No late fees under Section 234F, but filing is still advised for documentation.

Q5 : Can a belated return be revised?

Ans : Yes, but only until 31st December of the assessment year.

Q6: What if a Return is Not Filed Within the Due Date?

If you miss the due date (31st July for most individual taxpayers), you can file a belated return by 31st December of the assessment year. A late fee will apply under Section 234F:

  • ₹5,000 for total income exceeding ₹5 lakh.
  • ₹1,000 for total income up to ₹5 lakh.
  • No penalty if income is below the taxable threshold.

Q7: Is there any penalty for late filing of ITR?

Ans : Yes, filing ITR after the due date incurs a penalty under Section 234F:

    • INR 5,000 for income above INR 5 lakh.
    • INR 1,000 for income up to INR 5 lakh.
    • No penalty for individuals with income below the basic exemption limit.

Q8: Can a belated return be revised?

Ans :Yes, a belated return can be revised. However, The deadline for revising or filing a belated return is 31st December of the relevant AY. Taxpayers ensure all corrections or updates are made before this date.

Q4: Can I claim a tax refund through a belated return?

Ans: Yes, you can claim a refund by filing a belated return under Section 139(4). Taxpayer snsure: bank account is pre-validated on the e-filing portal, & The belated return u/s 139(4) return is filed within the allowed timeline.

Q5: Can a belated return be filed after 31st December?

Ans: No, a belated return cannot be filed after 31st December of the assessment year. However, the taxpayer may file an updated return (ITR-U) u/s 139(8A) for specific situations. Filing an ITR-U does not allow you to claim an tax refund.

  • For example, for AY 2024-25 (FY 2023-24), the deadline for a belated or revised return is 31st December 2024. Post this, you can file ITR-U by the applicable deadlines (e.g., up to 31st March 2026), but with additional tax and penalties

31st December Deadline

31st December Deadline penalties

/ ITR

Non-Disclosure of foreign asset in ITR need to avoid Penalty

Non-Disclosure of foreign asset in ITR need to avoid Penalty

Undisclosed Foreign Asset must accurately report in ITRs to avoid Penalties

The issue of whether a bona fide mistake in the non-disclosure of foreign assets in an Income Tax Return (ITR) would result in a penalty under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Act) has been a subject of legal debate. The answer depends on various factors, including the interpretation of the law by tax authorities and the judiciary.

Undisclosed Foreign Asset

  • Definition: Under Section 2(11) of the Black Money Act, an undisclosed foreign asset is one located outside India that has not been reported in the taxpayer’s ITR. If the taxpayer fails to explain the non-disclosure satisfactorily, the asset is considered undisclosed.
  • Disclosure Requirement: Since AY 2012-13, disclosing foreign assets in Schedule FA of the ITR is mandatory.

Current Penalty for Non-Disclosure – Provisions Under Sections 42 & 43

  • Section 42: Imposes a penalty for failure to furnish details of foreign income and assets in the Income Tax Return (ITR). This applies to residents (other than those not ordinarily resident in India) who have foreign assets or income and fail to report them.
  • Section 43: Imposes a penalty for failing to report or inaccurately reporting foreign assets in the ITR. This includes assets held as a beneficial owner or those in which the taxpayer has a financial interest. Section 43 of the Black Money Act: Imposes a penalty of ₹10 lakhs for failing to disclose foreign income or assets. The language of the section suggests that the penalty is at the discretion of the Assessing Officer (AO), as indicated by the word “may.”
  • Penalty Amount: The penalty under both sections is ₹10 lakh, regardless of the asset’s value.

Grey Area: Discretion of the Assessing Officer

  • Discretionary Penalty: The use of “may” in Section 43 implies that the AO has some discretion in imposing penalties. This discretion can consider the taxpayer’s intent, circumstances, and whether the non-disclosure was a bona fide mistake or deliberate evasion.

Conflicting Case Laws

  • ITAT Mumbai in Addl. CIT v. Leena Gandhi Tiwari (2022):
    • Judgment: The tribunal emphasized that bona fide actions should be excluded from stringent provisions like the Black Money Act. The tribunal held that penalties should not be imposed for bona fide mistakes, even if non-disclosure occurred.
    • Rationale: The tribunal argued that strict implementation should not overshadow the genuine intentions of taxpayers.
  • ITAT Mumbai in Ms. Shobha Harish Thawani v. Jt. CIT (2023):
    • Judgment: The tribunal took a contrasting stance, holding that Section 43 does not allow for waiving penalties, even if the asset is disclosed in the taxpayer’s books. The penalties are strictly linked to non-disclosure in Schedule FA.
    • Rationale: The tribunal underscored the stringent nature of the Black Money Act, which aims to ensure complete transparency in reporting foreign assets.
  • The conflicting decisions of the Mumbai ITAT create uncertainty about the consequences of a bona fide mistake in non-disclosure of foreign assets. While the 2022 case suggests that a bona fide mistake may not lead to a penalty, the 2023 case takes a stricter approach, leaving little room for leniency.
  • Practical Implication:

In a bona fide case, such as where a non-resident salaried employee inadvertently fails to disclose foreign assets after becoming a resident, the outcome could vary depending on the AO’s interpretation and the jurisdiction of the case. While some may argue for leniency, the strict provisions of the Black Money Act could still result in penalties.

  • Note: Given the conflicting judgments, taxpayers should exercise caution and seek professional advice when dealing with foreign assets to avoid penalties under the Black Money Act.

Amendment Proposed in Budget 2024

non-reporting or incorrect reporting of foreign assets

  • The Budget 2024 introduces a significant amendment to the penalty provisions under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Act). This change provides relief to taxpayers who inadvertently fail to report certain foreign assets.
  • Exemption from Penalty: The Budget 2024 proposes to exempt the penalty under Sections 42 & 43 for non-reporting or incorrect reporting of foreign assets (other than immovable property) where the aggregate value does not exceed INR 20 lakh.
  • Effective Date: This amendment will come into effect from October 1, 2024.

Rationale and Implications

  • Relief for Taxpayers: This amendment is aimed at providing relief to taxpayers, particularly those who may have unintentionally failed to report small movable assets abroad. These could include employee stock ownership plan, social security investments, or other foreign assets acquired by Indian professionals working in multinational companies.
  • Current Exemption: Currently, an exemption exists for one or more foreign bank accounts with an aggregate balance not exceeding ₹5 lakh during the year. The new amendment extends this relief to other types of foreign assets up to ₹20 lakh.

Reporting Requirements as per Amendment Proposed in Budget 2024

  • Mandatory Disclosure: All residents and ordinarily resident taxpayers must disclose foreign assets and income from such assets in their ITRs. Failure to do so currently attracts the penalty specified under Sections 42 and 43.
  • Immovable Property Exclusion: The proposed amendment specifically excludes immovable property, meaning such assets must still be reported, and failure to do so can result in penalties.

Conclusion

The amendment introduced in Budget 2024 reflects a more lenient approach towards minor non-compliance related to foreign assets, recognizing that the previous penalty could be disproportionately harsh for small, movable assets. This change is expected to provide significant relief to individuals who may have inadvertently missed reporting such assets, ensuring that the penalty provisions are fair and proportionate.

Professionals and individuals with foreign assets should stay informed about these changes and ensure accurate reporting in their ITRs to avoid any penalties under the Black Money Act

/ ITR

Guide to Choosing Correct ITR Form for Stock Market Income

Type of ITR

Guide to Choosing Correct ITR Form for Stock Market Income

For those whose yearly income exceed the basic exemption limit, they must file an ITR. To finish the electronic filing of their income tax returns, taxpayers must fill out a variety of paperwork. These ITR forms are divided according to the type of income. But each situation requires a different ITR form, so choosing the right one can be difficult.

For salaried individuals who earn money from intraday stock exchange or futures and options (F&O) trading, it is important to file the correct Income tax return form to accurately report your income. Different Types of Income Tax Return (ITR) forms and their respective uses:

ITR 1

  • Eligibility: Individuals residing in India with a total income of up to Rs 50 lakh.  Sources of Income: Salary, house property, and other sources. Not Applicable for: Non-Resident Indians (NRIs). Salaried taxpayers can file ITR-1 using Form 16.

ITR 2

  • Individuals and Hindu Undivided Families (HUF) with income from sources other than business or profession.  Sources of Income: Salary, house property, capital gains, and other sources.
  • Can be filed by salaried people who have made profits or losses from stock purchases and sales. NRIs earning from similar sources may also use ITR-2.

ITR 3

  • Individuals with income from business or profession.  Form ITR-3 is specifically designed for this purpose. Individuals can use Income tax return form  ITR-3 to report income from the following sources:
    1. Salary: Income from your job or employment.
    2. House Property: Income from real estate.
    3. Capital Gains: Profits from the sale of assets such as stocks or property.
    4. Business or Profession: Income from a business or trade, including presumptive income.
    5. Other Sources: Any additional income, such as interest or dividends.
  • Salaried individuals earning from intraday stock exchange or futures and options trading should file ITR-3. Using ITR-3 ensures comprehensive reporting of your diverse income streams, which is crucial for accurate tax filing and compliance.

ITR 4

  • Eligibility: Individuals, HUFs, and partnership firms subject to a presumptive taxation system.
  • Sources of Income:
    • Business with turnover up to Rs 2 crore (section 44AD).
    • Profession with turnover up to Rs 50 lakh (section 44ADA).
  • Usage: Freelancers in notified professions can use ITR-4.

F&O Transaction and 44AD

ITR 5

  • LLPs, partnership firms, Association of Persons (AOP), and Body of Individuals (BOI). ITR 5 filling required  To disclose profits from businesses and professions, as well as other sources of income.

ITR 6

  • Companies (excluding those claiming exemption under section 11). ITR 6 filling required to report income from industry or profession and other forms of income.

ITR 7

  • Entities including companies, partnerships, and trusts exempt from paying income tax. ITR 7 filling required, Income tax dept Govt tax return for exempt entities like NGO or NPO etc

ITR Form

Summary of Income tax Return From to use for reporting stock market income.

who required to file itr

Choosing the correct ITR form is crucial for accurate reporting of your stock market income. If you are unsure which form to use, it is advisable to consult with your Chartered Accountant to ensure a smooth and correct filing process. Choosing the correct ITR form is crucial for accurate tax reporting. which ITR form to use for reporting stock market income. To clear up any confusion, here is a quick summary are mention here under :

  • Salary + Capital Gains: Use Income tax return form ITR-2
  • Salary + Capital Gains + Intraday Trading: Use Income tax return form ITR-3
  • Salary + Capital Gains + F&O Trading: Use Income tax return form ITR-3 (or ITR-4 if opting for presumptive taxation)
  • Only Intraday Trading: Use Income tax return form ITR-3
  • Only F&O Trading: Use Income tax return form ITR-3 (or ITR-4 if opting for presumptive taxation)
  • Salary + F&O Trading: Use Income tax return form ITR-3 (or ITR-4 if opting for presumptive taxation)
  • Salary + Intraday Trading: Use Income tax return form ITR-3

Consequences and Solutions for Filing the Wrong ITR Form

Filing the incorrect Income Tax Return (ITR) form can lead to several complications. Understanding these and knowing how to rectify them is crucial to avoid penalties and ensure compliance. By understanding these consequences and solutions, you can ensure compliance with tax laws and avoid potential issues with the Income Tax Department. Here’s what happens and how you can address the situation:

What is the Consequences of Filing the Wrong ITR Form? 

  1. Rejection of ITR:
    • The Income Tax Department may reject your return if it’s filed in the wrong form. This causes delays in processing and can lead to penalties for late filing if the mistake is not corrected promptly.
  2. Scrutiny or Assessment:
    • Filing with the wrong form could trigger additional scrutiny from tax authorities, They might request you to re-file using the correct form, potentially causing further delays and complications.

What is solutions to Address Filing the Wrong ITR Form? 

  1. Revised Return:
    • If you identify the error before the ITR filing deadline (typically July 31st for most taxpayers), you can file a revised return using the correct form. There’s no limit on the number of revised returns you can submit within the assessment year, allowing you multiple opportunities to correct mistakes.
  2. Defective Return Notice:
    • If the error is identified by the tax department after the deadline, you might receive a “defective return notice” under Section 139(9) of the Income Tax Act. You are given 15 days to rectify the mistake by filing a revised return. If needed, you can request an extension for this period. Timely rectification ensures your return is processed correctly and helps avoid penalties.
/ ITR

Latest Income Tax Return (ITR) Forms update for FY 2023-24

Kind of Tax returns

Latest Income Tax Return (ITR) Forms update for the financial Year 2023-2024

These updates in the ITR forms for FY 2023-24 aim to simplify the tax filing process, enhance transparency, and ensure compliance with evolving tax regulations. Make sure to incorporate these changes while preparing your ITR to avoid any discrepancies and ensure accurate reporting. Share this information with peers to help them navigate the updated tax filing process effectively.

Below mention are detailed breakdown of the key changes:

  • Taxpayer required to report Dividend Income Reporting: dividend income received from a unit in an International Financial Service Centre shall be taxed at a reduced tax rate of 10% instead of 20%. Schedule OS has been amended in new Income tax return forms to incorporate such change in Form ITR 2, 3, 5 and 6
  • Income tax Filing Deadlines: Taxpayers now have a new column in income tax Forms ITR 3, 5 and 6 where they specify the deadline for filing income returns.
  • Taxpayer required to report Employee Stock Option Plans Tax Benefits: Enhanced reporting requirements for ESOPs required to disclosure of Permanent Account Number & Department for Promotion of Industry and Internal Trade Registration Numbers in Form ITR 2and 3.
  • You required to update on Adjustment of Unabsorbed Depreciation: The new provisions allow for the adjustment of unabsorbed depreciation in Form ITR 3 and 5.
  • Deduction under Section 80CCH for Agniveer Corpus Fund : A new column is introduced to claim deductions under Section 80CCH for Agniveer Corpus Fund in Form ITR 1, 2, 3 and 4.
  • Taxpayer required to report Cash Receipts Reporting: A new column for cash receipts reporting has been added to claim an enhanced turnover limit in Form ITR 3, 4 and 5.
  • Taxpayer required additional reporting on maintenance and medical treatment of dependents with disabilities in Schedule 80DD: Similar to Schedule 80U, Schedule 80DD is added to claim deductions for maintenance and medical treatment of dependents with disabilities in Form ITR 2 & 3.
  • Income tax Capital Gains Accounts Scheme Reporting: Detailed disclosure of deposits in the CGAS Scheme is now required in Form ITR 2, 3, 5 and 6.
  • You are needed to report on Start-up Deduction Details: New Schedules for claiming deductions under Sections 80-IAC & 80LA have been introduced in Form ITR 5 and 6.
  • Taxpayer required to report Legal Entity Identifier Details: LEI disclosure is now Compulsory for income tax refunds exceeding Rs. 50,00,00,000/- in Form ITR 2, 3, 5 and 6.
  • Now Taxpayer can verify tax audit via use of Electronic Verification Code: Individuals & HUFs under tax audits (ITR 3) can now verify returns using EVC. This simplifies the verification process & enhances ease of income tax compliance.
  • Now Taxpayer required to report Reasons for Tax Audit: Additional details are required from audited companies in Form ITR 3, 5 & 6 regarding the circumstances necessitating tax audits. This change enhances transparency and accountability in tax reporting the circumstances necessitating tax audits.
  • Online Gaming Winnings Taxation: Schedule OS has been amended to include reporting of income from online gaming in form ITR 2, 3, 5 & 6.
  • Taxpayer now report on Business Trust Sums : A new column under Schedule OS additionally added to allows for reporting sums received by unitholders distributed by business trust to avoid non-taxation in Form ITR 2, 3 & 5.
  • Taxpayer required to report Contributions to Political Party: Schedule 80GGC will require detailed disclosure of political party contributions in Form ITR 2, 3, 5 & 6.
  • Assesses report on all the Bank Account Disclosure: Taxpayers compulsory disclose all bank his accounts held, except dormant accounts in Form ITR 2, 3 & 5.
  • New Schedule 80U for reporting who claiming disabilities: Schedule 80U is added for claiming deductions for persons with disabilities, seeking detailed information in Form ITR 3.

Type of ITR

All the above changes & updates purpose to simplify income tax reporting, enhance transparency, & align with evolving income tax regulations. Save this comprehensive overview for future reference and share it with your peers to help them navigate the tax filing process effectively.

Can updating ITR cost you more than a reassessment?

Can updating ITR cost you more than a reassessment

Which is Better- Old vs New Tax Regime Comparison 2024 ?

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/ IBC

Arbitral-award can’t be set aside by NCLT under Moratorium

NCLT under the IBC Act

NCLT Kolkata – Arbitral award cannot be set aside by NCLT under IBC Moratorium

In the case of Mahavir Industrial Corporation vs. Hindustan Controls and Equipment Private Limited, the National Company Law Tribunal (NCLT) Kolkata ruled that it lacks the jurisdiction to set aside an arbitral award during an Insolvency and Bankruptcy Code (IBC) moratorium. This decision stems from the statutory limitations placed on the NCLT’s powers under the IBC.

The case involved the resolution professional (RP) of Hindustan Controls and Equipment Pvt. Ltd., who sought to set aside an arbitral award issued after the commencement of the Corporate Insolvency Resolution Process (CIRP) for the corporate debtor. The RP argued that the continuation of arbitration proceedings and the issuance of the award violated the moratorium imposed under Section 14 of the IBC, which stays all legal actions against the corporate debtor once the insolvency process begins​.

However, the NCLT clarified that while it has the authority to issue interim measures related to arbitration and to enforce arbitral awards, it does not have the power to set aside arbitral awards. Such challenges must be brought before a competent court under Section 34 of the Arbitration and Conciliation Act, 1996. The NCLT referenced the Supreme Court’s precedent in the Gujarat Urja Vikas Nigam Limited case, which emphasized that the NCLT should not overstep its jurisdiction into matters that do not directly pertain to insolvency resolution​.

The respondents countered that any challenge to the arbitral award must be made under Section 34 of the Arbitration and Conciliation Act, 1996, and not under Section 60(5) of the IBC. They argued that the NCLT does not have the jurisdiction to set aside arbitral awards, which is a power reserved for courts designated under the Arbitration Act​.

The NCLT, comprising Members D. Arvind and Bidisha Banerjee, agreed with the respondents. The tribunal noted that while the NCLT has broad residuary jurisdiction under Section 60(5) of the IBC to adjudicate issues arising out of insolvency proceedings, this does not extend to setting aside arbitral awards. The NCLT emphasized that it cannot assume powers that the IBC does not explicitly grant it. Consequently, the application to set aside the arbitral award was dismissed, but the RP was granted the liberty to challenge the award through appropriate legal channels​.

This NCLT’s decision highlights the clear delineation of authority between the NCLT and courts under the Arbitration Act, reinforcing the principle that challenges to arbitral awards must follow the specific legal framework established for arbitration, even during insolvency proceedings. The NCLT’s decision reinforces the separation of jurisdiction between insolvency proceedings under the IBC and arbitration matters, ensuring that challenges to arbitral awards must follow the established legal framework of the Arbitration Act, even during insolvency proceedings.

The NCLT Kolkata, in its verdict on the case involving the Resolution Professional (RP) of Hindustan Controls and Equipment Private Limited, dismissed the application to set aside an arbitral award that was issued during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code (IBC), 2016. The tribunal held that the NCLT, as the Adjudicating Authority, lacks jurisdiction to annul such an award, even if it was made post-initiation of the Corporate Insolvency Resolution Process (CIRP)​.

The RP had contended that the arbitral award violated the moratorium imposed by the IBC, which stays all legal proceedings against the corporate debtor. Despite this, the NCLT ruled that its powers do not extend to setting aside arbitral awards, as this falls under the jurisdiction of courts designated under the Arbitration and Conciliation Act, 1996​.

The Kolkata Bench of the National Company Law Tribunal (NCLT) has ruled that it is not empowered to set aside an arbitral award issued during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code (IBC), 2016. This ruling came in the case involving the Resolution Professional (RP) of Hindustan Controls and Equipment Private Limited, who sought to annul an arbitral award passed after the initiation of the Corporate Insolvency Resolution Process (CIRP) against the company​

The RP argued that the arbitral proceedings and the resulting award violated the moratorium imposed under Section 14 of the IBC, which stays all legal actions against the corporate debtor. The RP claimed that the arbitrator was aware of the ongoing insolvency proceedings but proceeded with the arbitration regardless, thereby contravening the moratorium provisions​.

Thus, the NCLT dismissed the application, allowing the RP to seek appropriate legal recourse to challenge the arbitral award in the relevant judicial forum​ under IBC​. This ruling reinforces the principle that the NCLT’s jurisdiction during an IBC moratorium is confined to insolvency-related matters and does not extend to setting aside arbitral awards.

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