written by | March 16, 2022

Everything You Need to Understand About Filing Returns for Previous Years

Filing timely tax returns is the inherent responsibility of every citizen no matter which country you live in. As per the Income Tax authorities, you have to file your returns for every single financial year. Several individuals are unaware of tax payments and don’t know when to file income tax returns. They default in paying taxes for various reasons. Some reasons could be personal like a loss of job or some other unforeseen events that could have made the said individuals default on the filing of tax returns. The income tax department of India allows citizens who have defaulted in filing returns for two consecutive years, to complete the formality in the current year. So if you raise the question of whether you can file income tax return for assessment year 2019-20 now – the answer is yes. Similarly, you don’t have to be worried if you have missed the date to file income tax return for assessment year 2020-21. According to the Income Tax Department provisions, you will be allowed to file your returns. When you file returns after the specified due date, it is termed as ‘Belated Return’. This involves paying a belated fee as well. Let us understand the formalities and procedures for filing returns for previous years.

Did you know? From the date of passing the 2022 budget, transfer of digital assets such as crypto will be taxed at 30%?

Understanding How to File Income Tax Returns for Previous Years

There are many individuals who find themselves in a dilemma because of not having filed their returns for previous years. You must remember that if you are one of them, you can file returns only for the past two years. So, if e.g. you have defaulted on filing returns for the financial year 2017-2018, then you will have to file your returns by the end of the 2019-20 financial year.

Also Read: Penalty for Late Filing of Income Tax Return

How to File Returns For the Previous Three Years?

Given below are the various steps involved in filing your income tax returns for the last three years:

  • Visit the income tax website for e-filing of returns. The link to the same is www.incometaxindiaefiling.gov.in.
  • Complete the registration formalities by sharing your PAN card details. Make a note of the user id which you will have to use for all references.
  • Upon seeing the Income Tax return form, click on the word ‘download’ displayed in the menu and select the said financial year. Now select the tax returns that apply to you. If you are well-versed in the process, you can complete the entire process yourself. All you have to do is to click on the ‘Quick E-fill ITR’ link. You can either key in your details or avail the auto-fill feature if you have already furnished your details.
  • Now click on the ‘calculate tax’ feature. This will provide you with the liability details. You make the necessary payment, settle your tax returns and complete the formalities requested in the challan.
  • To understand whether all the details are correct, click on the button that states ‘Validate’. Go through all the details and click on ‘upload file’. It is always wise to save a copy of that file as authentic proof of settlement of your tax liabilities. This will also be of assistance for all future references.
  • You will be asked to digitally sign the form. After doing the needful, you will be able to download the income tax return verification better known as ITR-V.
  • You will have to take a printout of this form, sign the same in blue ink, and send it to the postal address of the income tax department within a timeframe of 4 months.

Also Read: What Are the Components of Income Tax Law in India?

Key Considerations Before Filing Tax Returns of the Past Years

  1. Individuals who file their income tax returns for previous years qualify for a refund of excess tax payments
  2. If you have made any losses by selling an important asset e.g. a house, then you automatically get exemption from the applicable clause.
  3. Suppose the deadline for filing returns is January 10, 2021. If you file your returns after this date, your penalty of late fee amounts to ₹10,000. If your earnings are below the taxable limit, you will not have to pay this penalty even if you file your returns after January 10, 2021.

The penalty clauses will vary and are dependent on the timeframe you have defaulted on.

The Impact of Not Filing Income Tax Returns for Previous Years

There are various outcomes that impact you if you are a defaulter. These include:

  • Payment of interest: If you have not filed your tax returns for the past years, you will have to pay a certain amount as interest on the tax which is outstanding, when you do file your returns.
  • If you are a defaulter and have not filed your returns for the past couple of years, you become liable for the payment of a penalty that amounts to Rs. 5,000. This is in accordance with the rules and regulations of the income tax department.
  • There are many instances where defaulters try to settle their liabilities of previous years but experience various errors in the process of filing their belated tax returns. In such cases, it is advisable to seek professional help or connect with the support system of the income tax department immediately.
  • Refunds for defaulters: At times, defaulters who do settle their income tax returns of past years may receive a refund, if eligible for one, after a delay.

Benefits of Filing Income Tax of Previous Years

You can avail of many benefits once you settle your tax returns of previous years. Some of these are as follows:

  • Loans: Settlement of previous tax returns will help you get faster approvals for loans when you apply for them.
  • Investments: Once you complete filing your tax returns for previous years, you will find making investments or trading in the share market comparatively easy. If your tax returns are in order, it speaks volumes of your responsibilities as a responsible citizen.
  • Income proof: Individuals who fulfil their commitments towards filing tax returns of previous years can present their documents whenever the situation demands e.g. purchase of goods on a loan basis.
  • Refund: Individuals who are taxed with an amount beyond their said liability, for the previous years will be able to claim a refund of the excess amount.
  • Travel: Individuals who settle their income tax returns of previous years are able to avail of speedy processing of visas for international travel. Settling all tax liabilities affirms the person’s responsibilities towards the government and the economy.

Conclusion

The details of this article will surely help you understand the importance of fulfilling your tax returns of previous years and how you can benefit from the same. Sometimes some issues arise which are beyond human error, like the covid-19 pandemic. This had resulted in many responsible individuals' inability to file their tax returns on time. In such cases, the central government takes timely steps to and extends the date for filing returns to facilitate the filing of tax returns.Follow  Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What does the non-filing of tax returns for 2 years entail?

Ans:

A person who has not filed income tax returns for two consecutive years will have to pay 5% of the said taxes per month, for the first 5 months up to 25% of the said tax bill. The Internal Revenue Service (IRS) will penalise the person with an interest amount, until the liabilities are settled.

Q: Can we file income tax returns for financial year 2018-19, now?

Ans:

A belated return can be filed until the end of the assessment year or the completion of the assessment. If e.g. for the assessment year 2019-20, a person can file a belated return until the 31st of March 2020.

Q: How to file ITR 2018-19, and if eligible, how does one get a refund?

Ans:

The last date for filing of 2018 tax returns is 18 April, 2022. A person can receive a refund, if eligible, if the tax returns are filed before this date. If the person has obtained an extension for filing tax returns, then the timeline for the same is 17 October, 2022.

Q: Is there a penalty if you file your tax returns late?

Ans:

Yes. If you file your tax returns beyond the said time limit, you will be liable to pay a penalty of ₹5,000.

Q: What is the total number of past years that I can file my tax returns for?

Ans:

According to the Internal Revenue Service (IRS), it is wise and practical to settle all your tax liabilities of the past.

Q: Is it possible to file income tax returns for the previous years?

Ans:

Yes.It is possible to file returns for the previous years, though you must remember that you can do so only for the two years that precede the current financial year.

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