December 31, 2023: Deadline to File Belated Income Tax Returns (ITRs)

Those who have yet to file their income tax returns (ITRs) for the financial year (FY) 2022-23 can do so up to December 31, 2023. In case an individual fails to meet this deadline, then this will invite the imposition of penalties and interest for late filing.

Earlier, the deadline for submitting ITRs for FY 2022-23, also referred to as the assessment year (AY) 2023-24, expired on July 31, 2023. Taxpayers who were not able to meet this deadline now have the option to file their ITRs till December 31, 2023.

The December 31, 2023 deadline applies to all taxpayers, including individuals, corporations, those undergoing audits, and those not undergoing audits. 

Late fee and penalty: As per Section 234F of the Income-Tax Act (ITA), 1961, individuals who fail to file their returns before the due date will be subject to a late filing fee. Those missing the deadline will have to shell out a penalty of Rs 5,000. However, taxpayers whose total income remains less than Rs 5 lakh will be required to pay a reduced penalty of Rs 1,000.

Additionally, in case a taxpayer files their return late, they will be charged interest under Section 234A of the ITA. This interest is calculated at a rate of 1% for every month, or part of a month, on the amount of unpaid tax. 

In case an individual fails to file ITRs, they will not be able to carry forward losses from the current AY, and penalties may be imposed for non-compliance. Penalties can range anywhere between 50% and 200% of the assessed tax, depending on the extent of non-compliance.

Updated return option: However, in case an individual misses the December 31 deadline, taxpayers can still file an updated return within the next 24 months of the end of the relevant AY. The Finance Act of 2022 introduced this provision to allow a longer duration for filing the return of income. However, filing an updated return leads to additional income tax liability. There is no penalty or fee incurred for filing updated returns. Nonetheless, taxpayers must pay additional tax as per Section 140B of the ITA.

The option to file updated returns: Taxpayers must file their updated returns using the ITR forms that were notified for the respective AY. This should be done in addition to the form ITR-U.

Importantly, updated returns cannot be submitted for claiming a tax refund. Taxpayers are required to adhere to the original filing deadline for refund claims.

Chances of legal proceedings: In certain extreme cases involving high-value discrepancies, there is a possibility of prosecution being initiated by tax authorities.