Taxpayers should be aware that the deadline for filing an updated income tax return (ITR-U) for FY2020-21 has passed, posing a risk of higher penalties for those who missed it.
The last date to file the updated ITR was March 31. Failure to do so may result in penalties of up to 50%, while individuals who have completely missed this deadline could face penalties of up to 200%. In severe cases, individuals may even face imprisonment, as demonstrated by a recent incident where a woman received a six-month jail term for failing to file an ITR on her income, following a complaint from the tax department.
According to a tax expert cited in an Economic Times report, imprisonment may be sought for deliberate acts of failure to file ITR, concealment of income, or making false statements. However, it's important to note that imprisonment is not applicable for individuals who have filed their ITR but failed to file an ITR-U (for correcting errors or misreporting), as ITR-U filing is not mandatory for everyone. Nevertheless, if tax authorities uncover any under-reporting of income, imprisonment may be pursued on grounds of concealment.
To avoid the severe consequences of non-compliance with income tax filing requirements, taxpayers should prioritize timely and accurate filing of their income tax returns. Here are some proactive steps individuals can take:
1. Stay informed: Keep track of important deadlines and regulatory changes related to income tax filing by regularly checking official government portals and tax authority websites.
2. Organize financial records: Maintain well-organized records of income, expenses, and tax-related documents throughout the year to facilitate accurate tax returns and early detection of discrepancies.
3. Seek professional assistance: Consider seeking guidance from tax professionals or financial advisors to ensure compliance with tax laws and regulations, especially for navigating complex tax issues.
4. Double-check information: Before submitting tax returns, carefully review all information for accuracy and completeness, including calculations, deductions, and other details.
5. File corrective returns promptly: If errors or omissions are discovered after filing the original return, promptly file an updated income tax return (ITR-U) to rectify discrepancies and minimize potential penalties.
6. Respond to tax notices: Promptly address any tax notices or communications from tax authorities to avoid escalation of issues and further scrutiny.
7. Maintain transparency: Disclose all relevant information accurately and truthfully to tax authorities to prevent allegations of concealment or misrepresentation.
8. Keep documentation handy: Retain copies of filed tax returns, supporting documents, and correspondence with tax authorities for future reference and evidence of compliance.
9. Stay vigilant: Be cautious of tax-related scams or fraudulent activities and verify the authenticity of communications claiming to be from tax authorities before providing sensitive information.
10. Stay updated: Stay informed about changes in tax laws, regulations, and compliance requirements to ensure continued compliance with tax obligations. Seek clarification from tax authorities or professionals if unsure about any aspect of tax filing obligations.
