Paying tax on time is a legal obligation for eligible citizens of a country. If the taxpayers fail to pay tax on time, there is the provision of penalties or imprisonment. The purpose of making people comply with the rules of taxation is for their own benefits, i.e. government uses tax revenues to build various public facilities like roads, bridges, water pipes, and a whole lot more. Indeed, tax revenues work as a social bridge between the citizens and government, which makes the government accountable for the basic requirements of citizens. Thus, it is important that you pay tax on time and prevent paying penalties or being imprisoned.
There is a 4-month window slab allowed for the taxpayers to consolidate their previous year’s income and file income tax returns in Assessment Year (A.Y.). Though the period of both PY and AY starts on 1 April and ends on 31 March, the period of the assessment year starts after the end of the previous year. Basically, income earned in a previous year is evaluated and taxed in the Assessment Year.
Due to the pandemic, the due date of filing ITR for FY 2019-20 was extended to 30th November 2020. But in general, the due date of filing ITR in the assessment year is 31st July for those taxpayers not liable to a tax audit. Taxpayers must file their ITR before the due date each year. There are penalties if they fail to file their return within the due date.
The income earned in PY 2020-21 will be accessed and taxed in the AY 2021-2022. The last date of filing ITR in the assessment year 2021-22 is July 31, 2021, for the taxpayers not liable to tax audit unless extended by the government. The Late filing fee will be applicable for filing returns after the due date.
Under section 234F, a late file fee is applied if you fail to file your ITR on or before the due dates. This rule has been effective since the year 2017-18. The maximum penalty is Rs. 10,000 if you file your ITR after the due date. But before 31 December, a penalty of Rs 5000 will be levied. Also, for the taxpayer whose total income doesn’t exceed Rs.5 lakh, the maximum penalty of Rs. 1000 will be levied for the delay.
E- Filing Date
Total income Below Rs 5, 00,000
Total income Above Rs 5, 00,000
Up to 31st July
Between 1st August2021to 31st December 2021
Between 1st January 2022 to 31st March 2022
As per the amendment in the Finance Act 2016, if the taxpayers fail to file their return on or before the due date, he/she can file belated IT Returns within 1 year from the end of the respective Assessment Year or before completion of the assessment, whichever is earlier. For example, for the AY 2021-22, the timeline to file a belated return was on or before 31 March 2023. So, in the assessment year 2021-22, a belated return can be filed any time on or before 31st March 2023 if the taxpayer fails to file his/her return on or before 31st July 2021.
If the taxpayers don’t file the ITR within an extended deadline, the income tax officer has the right to impose a fine and prosecute taxpayers for a term of 3 months to 2 years. Furthermore, if the tax amount a taxpayer owes exceeds Rs. 25 lakh, the prosecution period may extend to 7 years. However, the proceedings will be on hold unless the net payable tax amount exceeds Rs. 3000. In case of underreporting income, the income tax officer may impose a penalty of up to 50% of the unpaid tax.
Aside from the penalties levied by the IT Department, there are other consequences of late/missing ITR filing:
If a return is not filed within the due dates, losses incurred (other than house property loss) are not allowed to be carried forward to subsequent years.
Aside from the penalty for late filing, the interest rate of 1% per month will be levied till the date of payment under section 234A. Apart from this, the taxpayer will not be allowed to file ITR unless taxes are paid fully. The count of interest will start immediately after the due date. So, the more time you take time the more interest you have to pay.
If you have overpaid the income tax and entitled to receive a refund from the government, you must file the returns before the due date. If you fail to do so or owe tax, an entitled refund request can be rejected by the Income Tax Department.
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