Have you filed your tax returns and want to change/modify it?

Let us understand the process to modify income tax returns once you have filed it and also its implications.

August 03, 2020 9:01 IST | India Infoline News Service
Income Tax
It is essential to be extremely careful when submitting income tax returns online. However, despite all checks and balances, tax returns are prone to errors. What do we do in such cases? Fortunately, the Income Tax Act has a provision under which the tax assessee can submit a modified return in such cases and the modified return will be considered as the final return. There is no limit on the number of times you can file modified returns. Let us look at how to modify income tax returns once you have filed and its implications.

Returns can be modified voluntarily or under ITD order

There are two situations under which income tax filed can be modified. The first is voluntary modification. Once you have filed your returns online on the Income Tax Website, you may find that your returns are erroneous. This could be due to some income you forgot to show, some exemption you did not claim or a pure technical error like erroneous bank details or TDS details. In such cases, there is an online facility where you can enter Acknowledgement Number for the returns filed for the assessment year and make modifications.
The second case is when the Income Tax Department (ITD) finds discrepancies in your tax returns and sends intimation under Section 143 (1) to modify the returns. Normally, when this notice is sent to you by the ITD, the approval of the original return is held back and you are given a time limit within which to file modified returns online after making appropriate changes. Whether you are modifying returns voluntarily or under instructions from the ITD, you still need to e-verify your returns either with digital signature, Aadhar or bank mandate.

Time limits for filing modified IT returns

When the ITD sends you a notice under Section 143 (1) pointing out errors in your tax return, you are normally given a deadline by which to file the revised returns. It is advisable you meet that deadline as your IT Returns will not be processed until that time. Technically, you have time till the end of the next assessment year to file revised returns. Let us say, you are filing tax returns for Assessment Year 2021-22, corresponding to Financial Year 2020-21. For the year ending March 2021, you will have to file returns before July 31 2021. However, any modifications can only be made up to March 31, 2022. Previously, such modifications were permitted up to 2 assessment years but now it is just 1 assessment year.

In case you are filing modified returns voluntarily, there are two important deadlines you need to remember. Firstly, the last day of the assessment year remains your deadline before which you have to file your modified returns. However, there is one more condition. You cannot file modified returns, once the ITD has approved the original tax returns. If the ITD has no objection, it normally approves the returns within 3-4 months. Once the returns are approved, you cannot file modified returns. You still have an option to file but that entails a long process wherein you need to make special request to the IT department. Therefore, once you realize there is an error in your return filing, the sooner you rectify and re-you’re your returns, the better it is.

What are the implications of filing modified tax returns?

In the past, only those taxpayers who had filed returns before the deadline could modify their returns. However, now even late filers are allowed to file modified returns. One more thing you must remember is that while regular filing of tax returns is covered under Section 139 (1) of the IT Act, revised returns are governed by Section 139 (5) of the act. Here are the implications of filing modified returns.
  • If the entire tax or excess tax is already paid by you before the end of the financial year, then there are no penal implications when you file revised returns. However, if the revision is resulting in a refund or a higher refund, you must be doubly sure as, otherwise, it could be treated as a fraudulent claim.
  • If the revised returns result in higher tax payable and there is a shortfall in tax paid, then the revised returns offer you the facility to also pay the additional tax. However, the penalty and interest for short payment of tax is in-built in the system. So you cannot re-file your returns, unless the penalty and interest are paid in full.
When you file revised returns, ensure to retain copies of the original and revised returns for your records. Ensure proper documentation to justify the modification, especially if it results in higher refund. But the best way is to pre-empt such a situation with better checks and balances before filing your tax returns.

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