If a taxpayer misses the due date to file income tax returns, he or she can file a belated return. Read this article to find out the steps one must take for late filing of tax returns.
The due date for filing income tax returns varies for different groups of taxpayers. For individuals, HUFs and taxpayers whose accounts don’t need to be audited, the final date of filing ITR is generally July 31 (unless the government extends it). For FY 2018-19, the deadline to file the returns was extended to August 31, 2019. The due date of July 31 (August 31 for FY 2018-19) does not apply for categories like working partners of a firm and companies.
Now, if an individual has missed filing his or her income tax return by the due date, there is no need to worry. He or she can still file it. An ITR filed after the due date is termed as belated return. This can be filed any time prior to the end of the relevant assessment year or before the completion of assessment, whichever occurs first. This has been made applicable from AY 2017-18. The process to file a belated return is similar to that of filing ITR on or before the due date. The main difference would be that while filling the applicable ITR form, the individual would have to choose "Return filed under section 139(4)" from the drop-down menu.
Penalty for Late Filing ITR
This law of charging late filing fees under Section 234F of the Income Tax Act was introduced in the Budget 2017 and became effective from FY 2017-18. According to this section, an individual would have to incur a fee of up to Rs. 10,000 for filing ITR post the due dates specified in Section 139(1) of the Act. So, for FY 2019-2020, if an entity files ITR post the due date (August 31) but before December 31, a penalty of Rs. 5,000 shall be imposed. In case returns are filed after December 31, 2019, the penalty levied will be raised to Rs. 10,000.
A belated return, for the current assessment year, can be filed any time before March 31, 2020, should the assessee have missed filing ITR on or before August 31, 2019. If the entity is a small taxpayer whose gross total income is not more than Rs. 5 lakhs, then the maximum fees he or she is liable to pay is Rs. 1,000.
Consequences of Late Filing ITR
In case an individual has incurred any losses during the year, like a loss under the head ‘Capital Gains’ or a loss in business, it becomes vital to file ITR within the due date. The entity won’t be permitted to carry forward the losses, even if all taxes have been paid on time but the return is belated. However, if there is a loss under the head House Property, it can be carried forward, even if the ITR is filed after the due date.
Besides the penalty applicable for late filing, interest under Section 234A of the Act at 1% per month (or part thereof) shall be charged till the date of tax payment. It is necessary to note that ITR cannot be filed unless taxes are paid. The interest calculation will begin from the date falling immediately after the due date. Thus, the longer one waits, the more the individual will have to pay.
While there are some entities who shall not be penalized for filing their returns late, it is strongly advised to ensure ITR is filed before its due date if any tax refund is due. When ITR is filed before the due date, the interest paid on tax refund is calculated from April 1 of the relevant assessment year to the date when refund is granted. In case a belated ITR is filed, even though no penalty is imposed when income is below the tax exemption limit, the taxpayer can miss out on some of such interest. Here, the interest will be ascertained from the date of filing ITR to the date when refund is granted.