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Late Tax Return

Penalty for Late Filing ITR

Income Tax Return is a form used for filing Income Tax with the Income Tax Department of the country. It consists of pre-defined sections in which the taxpayer informs the Income Tax Department about his gross income, taxable income and, the payable tax. Individuals, Hindu Undivided Families, Companies and Firms are supposed to file ITR with the Income Tax Department of the country.

It is always advisable to complete the task of filing for Income Tax Return within the stipulated time period. There are certain advantages associated with the completion of the filing of Income Tax Return on time.

  • Tax Refund claim: In the case of additional tax deducted or paid by a taxpayer than the actual liable tax, the taxpayer can request for a tax refund by filing the Income Tax Return on time. Usually, taxpayers pay extra taxes due to extra deductions of TDS or double taxation, etc.

  • Loan approval: Many banks ask for the Income Tax returns while approving a loan for a two-wheeler, four-wheeler or home, etc. Filing of Income Tax Return on time will be beneficial when applying for any of these loans.

  • Act as an Income and address proof: The Income Tax Return receipts will act as an income and address proof during various official purposes in the future.

  • Carry forward of losses: By filing Income Tax Return on time, a taxpayer will get the opportunity to carry forward the capital losses incurred to the subsequent years. Moreover, ITR filing will also help in setting off capital losses against the capital gains obtained.

  • Faster VISA processing: During the time of VISA processing, a number of embassies can ask for Income Tax return receipts as financial proof. This also helps in faster VISA processing.

    However, many taxpayers do not give much importance to the on-time filing of Income Tax Return and the Income Tax Department takes stringent actions against these cases. There are certain penalties which a taxpayer might have to pay due to not filing Income Tax Return on time.

  • Refunds get delayed: If a taxpayer has paid an additional amount of taxes than the amount which he is liable to pay, then he must file for the Income Tax Returns in order to get the refund. But if there is a delay in the filing process, then there will be a delay in the process of receiving the refunds as well. So, on-time filing of Income Tax Returns ensures that the taxpayer obtains his refunds also on-time.

  • Unable to set off the capital losses: If a taxpayer does not file the Income Tax return on time, he will not be able to set off the capital losses against the capital gains. He would not be able to carry forward the capital losses to the subsequent years as well.

  • Penalty to be paid: A taxpayer has to pay a certain penalty amount for the late filing of Income Tax Return.

    • A taxpayer will have to pay a penalty of Rs. 5000, if he has filed the Income Tax Returns after the deadline, but before 31st Dec 2019.
    • A taxpayer will have to pay a penalty of Rs. 10,000 if he files for the tax returns after 31st Dec 2019, but before the end of the particular assessment year.
  • Interest to be paid: For non-completion of the ITR filing on time, a taxpayer will have to pay penalty and an interest amount of 1% per month. This interest is usually calculated from the due date for filing Income Tax Return to the date when the actual tax returns are filed by the taxpayer.

Reduction in the time limit to revise your ITR

There can be scenarios in which a taxpayer has made certain mistakes while filing for the Income Tax Return and he realizes this mistake after the submission of the Income Tax return request. These mistakes can be related to any category such as mentioning the incorrect bank details, claiming wrong deductions, forgetting to declare about some details, etc. In such cases, the taxpayer can file for a revised Income Tax Return request under Section 139(5) of the Income Tax Act, 1961.

A revised Income Tax Return means a tax return request by which the taxpayer can rectify the errors or the omissions that have occurred in the previous time while filing for Income Tax Return. A taxpayer can file a revised Income Tax Return request with the correct information than the previous time. In the earlier times, only those taxpayers who had filed their tax returns on time were allowed to file a revised tax return. However, now even those taxpayers who are filing belated returns are eligible for filing revised Income Tax Returns.

While a taxpayer is filing for a revised Income Tax Return, he will have to do so under Section 139(5) of the Income Tax Act, 1961. The taxpayer can select given Option ’17-Revised u/s 139(5)’ and further select ‘return filed under’ column. The taxpayer will also have to share certain details related to the original Income Tax Return such as the details associated with the Original Income Tax Return i.e. receipt number, the date on which original ITR was filed, etc.

During earlier times, a taxpayer had ample amount of time to file for a revised Income-tax Return. A taxpayer could file for a revised Income Tax return until 1 year, even after the expiry of the particular assessment year. Ideally, a taxpayer had a time period of two years from the end of a particular financial year until which he can file revised Income Tax returns. However, the time limit has been reduced now.

As per the new Income Tax laws, a taxpayer can file revised Income Tax Return until the end of that particular assessment year for which the original income tax return request has been initiated. Suppose, a taxpayer has filed the original Income Tax Return for the Financial year 2018-19, then he will have to file the revised Income Tax Return by 31st March 2020.

Penalty for Late Filing u/s 234F

According to the laws of the Income Tax Act, 1961, a taxpayer has to file the Income Tax return on-time i.e. within the pre-defined time limit. If a taxpayer fails to file the Income Tax Return within the pre-defined time limit set by the Income-tax Department, then the taxpayer will have to pay penalty under Section 234F.

According to the Section 234F of the Income Tax Act, 1961 a particular taxpayer who is not able to file for the tax returns by 31st July 2019, but is able to do so by 31st December 2019, will have to pay a penalty of Rs. 5000. Moreover, if a taxpayer is not able to do the tax filing by the end of the year i.e. by 31st December 2019, then he will have to pay a penalty of Rs. 10,000. Also, if a taxpayer has an annual income less than Rs. 5,00,000, then he will pay a maximum amount of Rs. 1000 as a penalty for missing the deadline.

Let us mention the implications of the Section 234F of the Income Tax Act, 1961 in a tabular form.

Date for filing ITRAnnual Income below Rs.5,00,000Annual Income more than Rs. 5,00,000
Up to 31st August 2018Rs. 0Rs. 0
Between 1st September 2018 to 31st December 2018Rs. 1000Rs. 5000
Between 1st January 2019 to 31st March 2019 Rs. 1000Rs. 10,000

Let us take an example and understand the details of the due date and the penalty to be paid.

  • Suppose, Mr. Ram is having a total income of Rs. 8 lakhs and he files for Income Tax Return for the Assessment Year 2019-20 i.e. for the financial year 2018-19 on 10th November 2019. So, according to Section 234F, what will be the penalty fee to be paid?

In the above situation, the Income Tax Return has been filed after the due date is over, but it has been filed before 31st December 2019. So, the penalty fees to be paid according to Section 234F is Rs. 5000.

Also, in this same situation if the annual income of Mr. Ram would not have exceeded Rs. 5 lakhs, then he would have paid a penalty of Rs. 1000.

  • Sheetal has an annual income of Rs. 5.5 lakhs and if she is filing her Income Tax Returns for the Assessment Year 2019-20 i.e. Financial Year 2018-19 on 7th February 2020. According to Section 234F, what will be the penalty fees to be paid?

Since Sheetal files the Income Tax Returns after the due date i.e.31st August 2019 and even after the end of the Assessment year i.e. 31st December 2019, then as per Section 234F the penalty fees to be paid will be Rs. 10,000.

Important dates to keep in mind

Some of the important dates to keep in mind related to the filing of Income Tax Returns are as follows:

  • The due date for filing Income Tax Return for Financial Year 2018-19 (Assessment Year 2019-20) is 31st August 2019 for individual taxpayers and those taxpayers whose accounts are to be audited have the due date for filing ITR by 30th Sep 2019.
  • If a taxpayer has missed filing Income Tax Return for Financial Year 2018-19 i.e. Assessment Year 2019-20 by the due date, then the late-filed return can be done by 31st March 2020, along with the payment of penalty fees according to Section 234F.
  • If a taxpayer has made a mistake while filing Income Tax Return for the Financial Year 2018-19 i.e. Assessment Year 2019-20, then a revised Income Tax Return can be filed by the end of the Assessment Year i.e. 30th March 2020.

Frequently Asked Questions

Are there any other fees or fine to be paid apart from the Penalty to be paid u/s 234F?

Yes, apart from the penalty to be paid under Section 234F if a taxpayer is not filing his ITR by the due date, then he will have to pay an additional interest of 1% each month, starting from the expiry of due date till the date ITR is filed.

What are the consequences if a taxpayer does not file his Income Tax Return?

If a taxpayer has an income which is taxable, then he will have to file for the Income Tax Return according to tax rates of the Income Tax Slab. Some of the major consequences of not filing Income Tax Returns are:

  • Penalty to be paid according to Section 270
  • The Taxpayer will receive a notice from the Income Tax Department according to Section 142(1) and Section 148.
  • The Taxpayer will have to pay additional interest under Section 234A/B/C.
  • The Taxpayer will not be able to carry forward the losses except those of the house property losses.

Is it feasible for a taxpayer to file an Income Tax Return for Assessment Year 2018-19 now?

No, if the taxpayer has not filed his Income Tax Return by the due date i.e. 31st July 2018, then he cannot do it now as the due date for filing a late tax return for Assessment Year 2018-19 i.e. 31st March 2019 has also passed now.

What are some of the important things to remember while filing Income Tax Return?

Some of the necessary things to remember while filing an Income Tax Return are as follows:

  • A Taxpayer should choose the correct ITR Form.
  • A Taxpayer must report all his income in his income tax return.
  • Income Tax Return must be verified after filing for rectification of any errors.
  • A Taxpayer should check his Form 26AS while filing for Income Tax Return.
  • Correct details related to all fields must be reported by the taxpayer.
  • It is inevitable for the taxpayer to pay all the taxes on time.

Apart from the penalty under Section 234F, what are the 3 other sections under which a taxpayer has to pay additional interest on non-filing of ITR on time?

The 3 other sections on the basis of which a taxpayer needs to pay additional interest on non-filing of ITR on time are:

  • Section 234A- 1% of interest to be paid per month for delay in filing ITR.
  • Section 234B- 1% of interest to be paid per month for non-payment or the short-payment of Advance tax.
  • Section 234C- 1% of interest to be paid per month for non-payment or short payment of the individual installments of Advance Tax.

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