Tax return: 4 deadlines that you should take note of before December 31

Income tax return filing: December 31, 2024, is the ultimate deadline for submitting belated and revised income tax returns for the financial year 2023-24 (Assessment Year 2024-25). Different taxpayer categories have specific Income Tax Return (ITR) filing deadlines, but the final date for belated and revised returns is consistent. It is essential for individuals to understand the consequences of not meeting the submission deadline of December 31, 2024, for the financial year 2023-24. 

Suppose the taxpayer fails to submit their income tax return by the specified due date or within the timeframe mentioned in a notice from the assessing officer. In that case, they must file a belated return. In case of any errors, omissions, or inaccuracies found by the taxpayer, they may submit a revised return.

When you file your income tax return after the due date (July 31 for salaried individuals, senior citizens), a penalty is levied as per Section 139(4) of the Income Tax Act. This penalty amount is Rs 5,000 and must be paid even if there is no outstanding tax amount. 

If your taxable income is below a certain threshold, a reduced penalty of Rs 1,000 applies. However, if your taxable income is below the basic exemption limit of Rs 3 lakh, no penalty is imposed for filing a late return.

When filing a late return for the fiscal year 2023-24, it is important to note that opting for the previous tax regime is no longer an option. As of April 1, 2023, the default tax regime has transitioned to the new system. This means that any delayed returns for FY 2023-24 must be submitted under the new tax regime.

The Old Tax Regime provides taxpayers with access to a variety of deductions and exemptions that are not available under the new system. These allowances play a crucial role in decreasing the taxpayer's taxable income and, consequently, lowering their income tax liabilities.

The new tax regime implemented for the financial year 2023-24 (Assessment Year 2024-25) only allows for two deductions: a standard deduction of Rs 50,000 and the employer's contribution to the National Pension System (NPS) of up to 10% of the basic salary. Notably, traditional deductions under Section 80C, 80D, and HRA tax exemption are not applicable in this new tax system.

Revised ITRs

Taxpayers have the option to submit a revised tax return in order to address any mistakes identified in the original or overdue filings. The revised return allows for adjustments to be made to errors present in the submitted Income Tax Returns (ITR), such as income omissions, missed deductions, or undisclosed bank accounts.

Failure to meet the deadline for filing a corrected return will result in the taxpayer being unable to do so for that specific assessment year. This will result in the inability to claim refunds or offset losses through a corrected return. While amendments to a return are permissible under income tax regulations, it is important to note that changes cannot be made if they result in increased refunds, reduce the total tax liability originally reported, or introduce losses on the return.

Reporting of foreign income or assets

Taxpayers who have foreign income or assets are required to disclose them by December 31, 2024, in order to avoid penalties under the Income Tax and Black Money Acts. The tax department has issued a public advisory to assist taxpayers in fulfilling this requirement. The advisory defines foreign assets for Indian tax residents as including bank accounts, cash value insurance contracts or annuity contracts, financial interests in entities or businesses, immovable property, custodial accounts, equity and debt interests, trusts where a person is a trustee, beneficiary, or settlor, accounts with signing authority, and any other capital assets held abroad.

The department emphasizes that taxpayers meeting these criteria "must" complete the Foreign Asset (FA) or Foreign Source Income (FSI) schedule in their Income Tax Return (ITR), even if their income falls below the taxable limit or the foreign asset was acquired from disclosed sources.

Foreign income and assets consist of different elements, including Foreign Bank Accounts, Foreign Equity and Debt interest, financial interests in any entity or business, immovable property, other capital assets, beneficial interests in foreign assets, and more.

Foreign income pertains to income from overseas in the form of interest, dividends, gross proceeds, redemptions, and other sources of income.

Direct Tax Vivad Se Vishwas Scheme

Taxpayers facing income tax disputes are encouraged to take advantage of the Direct Tax Vivad Se Vishwas Scheme by the deadline of December 31, 2024. This scheme, introduced in Budget 2024, allows taxpayers to settle their pending tax disputes with the Income Tax Department by paying a reduced disputed tax amount.

To benefit from the scheme, taxpayers are required to pay the disputed tax amount plus a specified percentage on this amount, along with the disputed tax amount itself. Upon depositing the specified tax amount and submitting the application form, the income tax department will eliminate any additional penalties and penal interest, effectively closing the tax dispute case.

Taxpayers who submit a declaration before December 31, 2024, must pay 100% of the disputed tax demand, with interest and penalties being waived in these cases. If the declaration is made on or after January 1, 2025, the taxpayer must pay 110% of the disputed tax demand. It is advisable for taxpayers to act promptly and take advantage of this scheme before the deadline to benefit from the reduced tax payment option.