If not filed yet, forget filing your Income Tax Return (ITR) till March 31, 2023 by paying a double fine after December 31, 2022, as the government has decided to reduce the span of an Assessment Year (AY) down from 12 months to 9 months for return filing purposes.
Incidentally, December 31, 2021 was the extended due date for the last assessment year (AY 2021-22) for non-audit cases, while in the current assessment year (AY 2022-23), tax filings will end abruptly on December 31, 2022 itself – that is 3 months before the end of the AY on March 31, 2023.
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“The due date of furnishing of Individual Income-tax Return (other than those subject to tax audit) for the Financial Year (FY) 2020-21 (Assessment Year 2021-22), which was July 31, 2021 was initially extended to September 30, 2021 and thereafter was further extended to December 31, 2021. As per Circular no 17/2021, the reason for such extension provided to taxpayers was on account of the pandemic, difficulties reported by taxpayers and other stakeholders in electronic filing of income-tax returns due to technical glitches,” said Dr. Suresh Surana, Founder, RSM India.
“However, it is notable that the due date for furnishing the revised return and belated return for FY 2020-21 was also December 31, 2021 and it was for similar reasons (of technical glitches) extended by circular no 17/2021 to March 31, 2022. Please note that the original timeline for filing the belated and revised return upto FY 2019-20 was 12 months from the end of such FY, which was reduced to 9 months from FY 2020-21 and onwards,” he added.
Done for all taxpayers
From an email communication from the Income Tax Department, it was, however, not clear if the reduction in the last date of filing an ITR was for just non-audit cases or for all.
Against a Financial Express Online query to the Central Board of Direct Taxes, CBDT Spokesperson, Surbhi Ahluwalia said, “The last date for filing belated or revised ITR for all categories is December 31, 2022.”
No filing, no revision
So, according to the CBDT, if you fail to file your ITR on or before December 31, 2022, you will not only face the consequences as a non-filer, but a taxpayer can’t even file a revised return after December 31, 2022.
So, even for those taxpayers, who have already filed the returns, revised returns have to be filed on or before December 31, in case of any error.
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Verification time also curtailed
The period of verification of e-filed returns filed after July 31, 2022 has also been reduced from 120 days (i.e. 4 months) to 30 days (i.e. 1 month). The reduction in the verification time would be permanent and applicable to the returns e-filed even within the due date from the next AY.
Although a taxpayer should file the ITR ideally on or before the respective due dates, in general filings were allowed all through an assessment year – that is from 1st April (provided the ITR utilities get notified and the tax filing portal gets opened for filing) to 31st March. An assessment year is the year just after a financial year, income of which is taken into account to assess and pay taxes.
So, what makes the government reduce the filing time for the taxpayers?
One of the reasons is that the pre-filled ITR Forms have reduced the burden of gathering all the data needed to file ITR and have made the filings quick and easy. So, much time is not needed for timely filing of returns.
“It is a misconception that the assessment year has been cut by three months. The assessment year remains the same, however the due date of filing the return has been shortened,” Archit Gupta, Founder and CEO, Clear.
This has been done on the basis of the following —
- The new IT Portal e-filing 2.0 has many of the income details pre filled, thereby reducing the time to file the ITR
- The ITR is also being processed quickly once the e verification has been completed. Sometimes the return gets processed within hours of filing the ITR
“However, the department has kept the assessment year the same so as to make sure assessment happens properly, specially where the scrutiny process is ongoing,” said Gupta.
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Will it cause hardship for the taxpayers?
The curtailed time span for filing of ITR for assessees without audit needs may cause hardship for some taxpayers, which the government needs to consider.
“It causes hardship with taxpayers specially Non Resident Indians (NRIs) who could not compile the relevant data by December 31,” said CA Geetanshu Bhalla, Director, The Virtual Compliance.
“It allows just 1 month time for the corporate taxpayers having Transfer Pricing applicability in addition to the due date,” he added.
“The government should amend the law to bring it back on March 31, 2023, as non-furnishing of return is a criminal offense under the Income Tax Act,” Bhalla further said.