Has a big mistake been made in ITR? Don’t panic! Know how to correct your mistake without penalty, understand the rules

Many times taxpayers unknowingly commit some serious mistakes while filing Income Tax Returns (ITR). Sometimes details of income from bank interest or freelancing are missed, and sometimes wrong tax deductions are claimed by mistake. In many cases, problems like selecting wrong ITR form or error in tax calculation also arise. If something like this has happened to you too, then there is absolutely no need to panic or get upset. Income Tax Law provides an excellent opportunity to taxpayers to correct such unintentional mistakes without any legal action. Opportunity to file ‘Revised Return’ is available under Section 139(5) Under Section 139(5) of the Income Tax Act, taxpayers get the special facility of filing Revised Return. This legal provision is like a safety net for those who have submitted their original ITR but later discover an error or omission in any of their financial information. It is a matter of relief that this facility is available to those taxpayers who had filed the return on time before the last date, and also to those who have submitted their belated return with late fees after the deadline. Which mistakes can be corrected through revised return? Through the revised return, you can completely correct many small and big shortcomings of your old form: Omitted income: If you have forgotten to show FD interest, dividend or rental income other than salary. Wrong tax deduction: Under- or under-claiming of Section 80C, 80D or other deductions. Selection of wrong form: For example, you were supposed to fill ITR-2 but you submitted ITR-1 by mistake. Calculation Mistake: To correct discrepancies or discrepancies in the calculation of tax liability. The revised return is considered to be your final valid record. It is very important for taxpayers to know that once you file the revised return on the portal, it is considered to be your final and main return in the eyes of law. The new revised form completely replaces your old original return and the old form becomes ineffective. Therefore, whenever you file a revised return, re-check all the information once again, so that there is no scope for any mistake again. Take special care of the deadline, the option closes after assessment. It is most important to take care of the deadline to improve ITR. As per rules, taxpayers can file revised returns by 31st December of the relevant assessment year or before the Income Tax Department completes your scrutiny/assessment (whichever is earlier). However, in recent years, under special circumstances, a provision has been made to extend this deadline till March 31. But keep in mind, if the department completes the assessment of your file, then this free option of revised return stops forever. Is there any penalty for filing revised return? The biggest advantage of filing revised returns is that the Income Tax Department does not charge you any additional penalty or late fees just for correcting your mistake. The government believes that this could be a human error. However, the only condition is that your first (original) return must be filed within the due date. If you have filed the first return late, then it will be called belated return and you will have to pay the late fee applicable on it. That means correcting the mistake is completely free, provided you are punctual. Make changes as many times as you want within the stipulated time frame. Another major feature of revised return is its flexibility. Any taxpayer can revise his return any number of times within the prescribed last date. There is no limit set in law as to how many times you are revising the form. Its benefit is given to those people who gradually become aware of their various mistakes. However, tax experts advise that instead of changing the form on the portal again and again, correct all the missing data in one go and submit the final form, so that no confusion spreads. Can the amendment be made even after the refund comes to the bank account? Yes, it is a true fact that even if your original return has been processed and the tax refund money has been credited to your bank account, you can still file a revised return within the stipulated time. This facility comes in handy when you suddenly realize a major financial mistake after receiving the refund. However, keep in mind that if your tax liability increases after amendment, you will have to pay the remaining additional tax along with interest, which will be adjusted with the refund you have already received. Benefits of making timely corrections: You will get relief from tax notices. By making timely corrections in your mistakes, you save yourself from many mental and legal troubles in the future. If there is any discrepancy in the original return, the Income Tax Department’s automated system catches it, due to which you may get a notice or scrutiny inquiry under Section 143(1). By filing revised returns on time, you avoid the lengthy correspondence process. Additionally, if your legitimate tax refund is stuck due to a technical glitch, the path to a refund becomes clear once it is rectified. What is ITR-U and how is it different from revised return? ‘Updated Return’ (ITR-U) under Section 139(8A) of the Income Tax Act is also a means of correcting mistakes, but it is completely different from the revised return. The main difference between the two is time and cost: Revised return (Section 139(5)): This is filed within the prescribed deadline (31 December) and no additional tax or penalty is required. Updated Return – ITR-U (Section 139(8A)): This is for those who have completely missed all the deadlines for filing returns. Under this, returns can be updated for the next 48 months (4 years) from the end of the relevant assessment year. Attention Additional tax burden on the pocket with ITR-U Since ITR-U is the last opportunity to improve compliance after the deadline, this facility is not free. In this, you have to pay an additional amount of up to 25%, 50%, 60% or 70% of your total tax and interest liability to the government as penalty. Therefore, it should not be considered a means of tax planning, but the last resort to avoid penalties. ITR-U Limitations: What can and cannot be done? ITR-U is extremely helpful for those who want to make voluntary disclosure of their missed income, but it has some strict limitations: No refund claim: You cannot claim a fresh refund through ITR-U. Tax liability will not be reduced: The already determined tax liability cannot be reduced through this. Restrictions during investigation: If any search, seizure or scrutiny action of the Income Tax Department is already going on against you, then you cannot file ITR-U. Only one chance: ITR-U can be filed only once for any assessment year. Easy way to file revised ITR online: With the help of internet and digital tax portal, filing revised return has now become very easy. You can follow these five easy steps: Step 1: First of all, login to the official e-filing portal of Income Tax with your credentials. Step 2: Go to e-file menu and select the option of ‘Revised Return’. Step 3: Enter complete details of your original return, such as acknowledgment number and date of filing. Step 4: Now the form will open in front of you, in which correctly update the financial information or deductions in which there was a mistake. Step 5: Resubmit the form and complete your e-verification through Aadhaar OTP or net banking. Keep in mind, without verification the revised return will not be considered valid. Important advice for taxpayers: Vigilance is the only protection in the digital age. In today’s modern era, every financial transaction of ours gets updated live in the Annual Information Statement (AIS) of the tax department directly through our PAN card. In such a situation, the facility of revised return should not be used as a means of carelessness. Repeatedly making major changes or making deliberate mistakes can put your file on the department’s radar. The best policy for taxpayers is to file the return u/s 139(1) with utmost care by choosing the correct form the first time, and make judicious use of the revised return facility only if there is a genuine human error.