Filing your Income Tax Return (ITR) within the due date is one of the most important as the failure to do so would attract fines and penalties. But, for one reason or the other, taxpayers can find themselves missing the July 31 deadline to file their ITR.

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The last date for filing ITR for AY 2023-24 for taxpayers, who didn’t need a tax audit, was 31 July 2023. If you have missed the deadline to file your ITR, you have three options— file a belated, revised, or updated ITR

However, these options come with their own sets of rules and penalties. Let’s take a look what should be the suitable choice among these three options:

Belated ITR: A second chance with a cost

The belated ITR serves as a lifeline for those who missed the original filing deadline. This route helps to avoid any stringent action by the Income Tax Department and is allowed under Section 139(4) of the Act. However, you still may pay penalties and interests on the tax amount.

A penalty is levied when filing a belated ITR as outlined in Section 234F of the Act. Small taxpayers, earning not more than Rs 5 lakh, face a penalty of Rs 1,000. If your income is above Rs 5 lakh you could be levied  a fine of Rs 5,000 for filing a belated ITR.  

Revised ITR: A chance to rectify mistakes

The revised ITR offers a redo for mistakes made during the original filing process. Errors such as forgotten bank accounts or undeclared interest from fixed deposits can be amended through a revised ITR. However, declaring additional income may result in an additional tax bill, along with penal interest.

This rectification option, under Section 139(5) of the Act, shares the same December 31 deadline as in the case of the belated ITR. While belated ITRs can also be revised, last-minute filings may leave no room for error correction. Though there is no limit to the number of revisions, tax experts caution that excessive revisions may draw scrutiny from the tax department.

Updated Returns: The new option

The updated return, a newcomer introduced in the 2022 Budget, extends the filing window to 24 months post the end of the relevant assessment year. It allows filing an updated ITR, irrespective of previous filing or missed filings.

However, an updated return can't be used to declare lower income, claim losses or request income refunds. It's critical to note that incorrect income disclosure corrected via updated returns incurs a penalty on the extra tax liability.

While filing an updated return, under Section 139(8A), no extra penalty is charged. However, if the ITR-U is filed within a year from the end of assessment year, an additional 25 per cent amount on tax liability and interest will be levied. If it's filed after a year but before two years, this additional amount rises to 50 per cent on tax and interest.