Budget 2021: Deadline for filing belated, revised ITR reduced by 3 months

Finance Minister Nirmala Sitharaman, in her Budget 2021 speech, proposed reduction in deadline for filing belated, revised ITR (Income Tax Returns) by three months from March 31 of the relevant assessment year to December 31 of the assessment year. This implies that the last date for voluntarily filing the ITR for the current financial year (FY21) will be December 31, 2021.

As per the Memorandum Budget document, this change will be applicable from the assessment year April 1, 2021. The decision has been taken in wake of the technological upgradation in the Income-Tax department where the time taken to conduct and complete such processes has greatly reduced.

An income tax return filed after the due date is called a 'belated' return, while revised income tax returns are those which are filed in case any mistake in  the original tax returns such as omission of interest income, bank account etc.  

Usually the taxpayers are supposed to file ITR by July 31 of the following financial year (called the assessment year). However, a taxpayer can file belated return at any time before the end of the relevant assessment year or before completion of assessment, whichever is earlier.  

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Presently, the belated and revised ITRs can be voluntarily filed up to March 31 of the assessment year. This means that a taxpayer cannot voluntarily file ITR after March 31. It can only be filed after receiving a notice from the Income-Tax department.  

"Sub-sections (4) and (5) of section 139 of the Act contain provisions relating to the filing of belated and revised returns of income respectively. The belated or revised returns under sub-sections (4) and (5) respectively of the said section at present could be filed before the end of the assessment year or before the completion of the assessment whichever is earlier. With the massive technological upgrade in the Department where the processes under the Act are moving towards becoming faceless and jurisdiction-less, the time taken to conduct and complete such processes has greatly reduced. Therefore, it is proposed that the last date for filing of belated or revised returns of income, as the case may be, be reduced by three months. Thus the belated return or revised return could now be filed three months before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier," as per the Budget document.

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Besides, the government has also proposed to reduce this time-limit for re-opening of tax assessment to 3 years from the present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of Rs 50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.   

Presently, an assessment can be re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time.

By Chitranjan Kumar