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Penalties Against Late Filing of Income Tax Returns

late filing

The last date for filing Income Tax Returns is July 31st, 2019. This time the Income Tax department may not extend the deadline as strict compliance rules are in force. For taxpayers, this is the right time to sit up and start putting all necessary documents in place required in filing ITR. Before starting the tax filing process, a large number of taxpayers waits till they get Form-16 and then start collecting requisite documents that play pivotal role in filing IT returns. But this process leads to delay in filing ITR.

Therefore, it is advised that this time you should have got hold of proof of monthly insurance premium you have been paying throughout the last Financial Year. Ensure that you have with you the monthly/quarterly rent receipts. Also, rush to collect the proof of school fee that you have paid for your kid.

Note it down that you can get tax exemption on school tuition fee for up to two kids only. Also check that you have fully used the ₹ 1.5 lakh tax exemption facility granted under Section 80C of the Income Tax Act, 1961. You can claim tax exemptions under Section 80C to 80U. All these documents help you file ITR before deadline making the entire process hassle-free.

But what would happen if you miss the deadline and file your ITR after the last date of July 31st, 2019? The very simple answer is: you will have to pay penalty and the amount of penalty varies depending on how late you file the ITR.

Provision for Penalties Against Late ITR Filing:

In 2017, the Income Tax department took some effective measures to promote tax compliance among taxpayers. Introduction of Section 234F which makes provision for penalty for late filing of ITR was one of such effective steps. Section 234F was brought with a view to inculcate the habit of filing of ITR on time among taxpayers. If the taxpayers file their return in time then it would be easy for the Income Tax Department to identify the non-filers and this enables the IT department too to issue notices in time.

As per the memorandum explaining the Finance Bill 2017, the late filing fee was introduced in view of the ‘Non-intrusive information-driven’ approach of improving tax compliance and most effective utilization of information in tax administration by the IT department. The “non-intrusive information-driven” approach means to increase the tax compliance by incorporating less efforts.

Additionally, to increase the number of tax filers and tax revenue was another motto of the Government. As per the newly introduced section 234F of the Income tax Act, 1961 which came into effect from April 1st, 2017, filing ITR after the due date, can make you liable to pay penalty. This new section is applicable for returns filed for FY 2017-18 or AY 2018-19 and onwards.

The penalty amounts may vary depending upon the type of violations of rules. For instance, say if you file after due date which is July 31st, 2019 but before December 31st, 2019, then you will have to pay a penalty of ₹ 5,000. But for returns filed after December 31st, penalty limit will be increased to ₹ 10,000.

It is good to take in note that if the total income is up to or less than ₹ 5 lakh, the maximum penalty levied will only be ₹ 1,000.

Do remember that income tax return for a particular Financial Year cannot be filed after completion of the assessment year. This means you cannot file ITR for FY 2019 after March 31st, 2020. Also, you will not have to pay any penalty if your annual gross income does not exceed the basic exemption limit of ₹ 2.5 lakh, even if you file late ITR.

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