ITR Filing FY2022-23: Do you need to revise your income tax return (ITR)? Find out here The revision can be done even after the return has been processed by the tax department. If you made a mistake in your tax return, you can rectify it by filing a revised return. Find out why, when and how to do it
Saakshi Mehta felt on top of the world when she got her first salary at the new job, in January. The Delhi-based graphic designer’s monthly income had increased 40% to nearly Rs.75,000, yet the tax remained zero. What’s more, while everybody at her workplace was running around to do tax-saving investments, Mehta was sitting easy. “My new employer did not deduct any tax, nor asked me to show proof of tax-saving investments. It was terrific,” she says. The good times didn’t last, though. Mehta’s delight changed to dismay when she sat down to file her tax return last month. Her new employer had missed the income from her previous job and, therefore, did not deduct any tax. With no taxsaving investments to show, except the mandatory Provident Fund contribution, she was saddled with a heavy tax liability. “I had to pay Rs.40,000 in tax. More than half of my June salary went into tax,” she says glumly.There is a sliver of hope for taxpayers like Mehta. Archit Gupta, Founder and CEO of tax filing portal, ClearTax, suggests that she file a revised tax return and opt for the new tax regime. Under Section 139(5), a taxpayer can voluntarily revise the tax return filed by him. Revised returns for the current assessment year can be filed till 31 December 2023. The revision can be done even after the return has been processed by the tax department. Under the new tax regime for the financial year 2022-23, Mehta will not get the benefit of Rs.50,000 standard deduction or her contribution to the Provident Fund, but her tax would be lesser due to the lower tax rates. She can save about Rs.3,200 tax under the new regime. Incidentally, ClearTax users are alerted about the difference in the tax liability of the old and new tax regimes when they file their returns. “The taxpayer can decide at that point which tax regime he wants to opt for,” says Gupta of ClearTax.
File a revised return if…
Tax
you made a mistake in your ITR.you missed reporting some income in your ITR.you were not able to claim HRA exemption.your Annual Income Statement was not updated when you filed the return.you could not claim credit for TDS due to late updation in Form 26AS.you did not verify your return within the specified time frame.Filing a revised return
If you, too, have made a mistake in your tax return, you can file a revised ITR. The mistake can be as simple as choosing the wrong tax regime or listing incorrect bank account details. There can also be serious mistakes that could lead to a tax notice and stiff penalties. Meet Pune-based IT professional Sunil Kumar (see picture), who filed his tax return in July. He duly included the income from interest and dividends that were showing in his Form 26AS, but did not mention the capital gains from stocks and equity funds in his tax return. When he checked his Annual Information Statement (AIS) this month, it showed capital gains of Rs.2.25 lakh. “What should I do now?” he asked ET Wealth.
Kumar can expect a notice from the tax department for the omission when his return is processed. The department has information on all financial transactions conducted by the individual during the year. Banks and NBFCs report all interest paid on deposits and savings accounts, brokerages and mutual funds report capital gains and dividends, credit card issuers report high-value transactions, tenants report payment of rent and forex dealers report purchase of foreign currency. This puts taxpayers like Kumar on a sticky wicket. “The tax department already knows what the taxpayer hasn’t told them in his return,” says Sudhir Kaushik, Founder and CEO of tax filing portal TaxSpanner. This is why experts recommend that taxpayers should reconcile the information in the AIS while filing their tax returns. Kaushik’s suggestion: Immediately file a revised return that mentions the capital gains. “He will have to pay additional tax, but he might escape the penalty for not reporting the income,” he adds.
SAAKSHI MEHTA, 28 years
She got a big hike when she changed jobs in December 2020, but her tax remained zero. Her new employer missed her income from the previous employer and, therefore, did not deduct any tax. With no tax-saving investments, except the Rs.48,960 contributed to the Provident Fund, she had to pay Rs.40,000 in tax when she filed her return for 2022-23.
CLEARTAX SUGGESTS
She should file a revised return under the new tax regime. She will not get the benefit of standard deduction or for PF contribution. But her tax will be lower at Rs.36,812, saving her Rs.3,228 in tax.
At the same time, taxpayers should not blindly follow the AIS. It takes time for details to get updated in the AIS. Even then, some types of income may not get captured in the form. For instance, the interest on small savings schemes won’t be mentioned in the AIS. “Taxpayers should go by the actual numbers and not wholly rely on the AIS,” says Gupta of ClearTax. Revised returns can be filed even by taxpayers who filed belated returns after the 31 July deadline. Also, there is no limit to the number of revised returns that one can file. Last year, one ClearTax customer revised his return 14 times before he finally got it right and submitted it. This is not recommended though. “Avoid filing multiple revised returns. Too many revisions can invite a closer scrutiny by the tax authorities,” warns Kaushik of TaxSpanner.
Note1:Under Section 139(5), one can voluntarily revise the ITR filed. Revised returns for AY 2023-24 can be filed till 31 December.
Note2:The revision can be done even after the tax return has been processed. There is also no limit to the number of revisions.
SUNIL KUMAR, 32 years
He included interest from fixed deposits and dividends received from companies in his tax return, but did not mention the capital gains earned from stocks and mutual funds. He recently discovered that capital gain of roughly Rs.2.25 lakh is mentioned in his Annual Information Statement. Out of this, Rs.80,000 is tax-exempt long-term gain, but the remaining Rs.1.45 lakh is short-term gain that is taxed at 15%.
TAXSPANNER SUGGESTS
He should file a revised return immediately. He should ask for a capital gains statement from the stock broker and the mutual fund clearing house. He’ll have to pay additional tax, but can escape being penalised.
Avoid misusing the facility
One should avoid misusing the facility to file a revised return. Nagpur-based IT professional Mona Sharma filed her return in July, but is contemplating revising it. “A friend told me that the HRA component in my Form 16 is very low. Can I increase the HRA component to claim a higher exemption? This could fetch me a tax refund,” she wrote to ET Wealth. What she doesn’t realise is that instead of a tax refund, she might get a tax notice.
The Form 16 is a legal document and the HRA component mentioned in it cannot be changed at will. The tax department already has the Form 16 filed by Sharma’s employer. If she files a revised return and claims a higher HRA exemption, the mismatch will immediately be detected by the tax department. The revised return will most probably get rejected and she might even have to explain why she is claiming more than the HRA received from he employer. “Taxpayers should not rely on half-baked tax advice. A qualified professional will be able to guide them better,” says Amit Maheshwari, Tax Partner in consultancy firm, AKM Global.
MONA SHARMA, 31 years
After she filed her return, an acquaintance told her that she could have saved tax by enhancing the HRA or some other tax-free component of her salary in the Form 16. She is contemplating filing a revised return for that.ET WEALTH SUGGESTS
The Form 16 filed by your company defines the salary and its components. One cannot rejig the components of the salary at will. Claiming more HRA than that mentioned in the Form 16 will invite a notice from the tax department.
RAHUL SINGH, 38 years
He left his regular job last year and became a consultant in his company. Under the new arrangement, he gets a lump-sum amount with a 10% TDS. He claims deduction for some expenses, such as travel, rent and purchase of accessories, but even then his tax outgo is quite high.TAXSPANNER SUGGESTS
He can reduce his tax significantly by opting for presumptive taxation. Under this, 50% of income from businesses or specified professions is presumed to be deductions.
You can also update returns
Besides revising their tax returns, taxpayers can now also update their previous returns. The concept of updated tax returns was introduced last year. Eligible taxpayers can update their ITRs by paying additional tax, interest or penalty. This was done to increase voluntary compliance and avoid penalties if an omission was detected by the tax authorities.
Updated returns can be filed within 24 months from the end of the relevant assessment year. However, this is allowed only if it results in additional payment of tax. An updated return cannot be filed to claim a tax refund. “Updated returns are being filed by those who ignored filing their ITRs, but now need it because they are applying for a loan or a visa,” says Kaushik of TaxSpanner. Taxpayers have also become jittery after reading media reports about tax notices to those who furnished incorrect information in their returns, or claimed false deductions or exemptions. The penalty is 25% of the additional tax due for up to one year’s delay, and 50% after one year and before two years. Think of this as an amnesty scheme by the tax department. You are getting a chance to rectify past tax returns and pay the due amount. This way you can avoid higher penalties and interest if the discrepancies are later discovered.
Note: Avoid misusing the facility to revise returns. Too many revisions can invite a closer scrutiny by the tax authorities.
Your checklist for filing revised returns
A revised return supercedes the previous return. Here are things to keep in mind when you file it.
Use the same mode
File your revised return in the same mode as the one used to file the original ITR. Online filing is mandatory, but some taxpayers are exempted. If, for some reason, you filed the original return physically, then you cannot file the revised return online.
Choose the correct option
A revised tax return is filed under Section 139(5). The taxpayer has to mention whether the revised return is being filed voluntarily or in response to a notice received under Section 143(1)(a).
Get the details right
Mention the correct acknowledgement number and date of filing the original return. The 15-digit acknowledgement number is very important and should be correctly mentioned in the revised return. Any mismatch will lead to the return being rejected as a defective one.
Verify your revised tax return
The tax filing process doesn’t end till you have verified your return. This is true for revised returns as well. The window for this is now only 30 days from the date of filing. Returns can be e-verified online or by sending a signed ITR V to the Centralised Processing Center of the tax department in Bengaluru.
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This story originally appeared on: India Times - Author:Faqs of Insurances
