Many taxpayers are finding themselves in turmoil as the due date for filing income tax returns (ITRs) is inching closer with each passing day. To add to their frustration, the Income Tax portal sometimes stops working, thus, making it increasingly difficult for them to upload their ITR details on time.
As of now, the deadline for filing the ITR for FY2023 or assessment year (AY) 2023-24 is set for July 31, and the Central Board of Direct Taxes (CBDT) has not made any announcement regarding an extension.
Penalties for not filing the ITR on time
While there is a possibility that the CBDT might announce an extension in the future, it's essential for taxpayers to plan and aim to file their ITRs by the original deadline of July 31 to avoid potential penalties.
Failure to meet the ITR filing deadline could lead to the following penalties for taxpayers:
- Interest: A late filing fee of 0.5 per cent of the tax due will be imposed for each month that the return remains outstanding, with a maximum of five per cent.
- Penalty: A penalty of up to ₹5,000 may be levied for late filing. Nevertheless, if your gross income is below ₹2.5 lakh, you will not incur any late filing penalty.
- Interest on penalty: Additionally, interest will be charged on the penalty amount at the same rate as the late filing fee.
To prevent such penalties and complications, taxpayers are strongly advised to ensure timely filing of their ITRs by the deadline.
File a belated return if ITR is not filed within the given deadline
In case you have missed the deadline for filing your ITR, it is advisable to file a belated ITR without delay. The late filing penalty is calculated daily, so filing your ITR as soon as possible will help you save money.
Here are some helpful tips for filing a belated ITR:
- Gather all relevant documentation pertaining to your income and expenses.
- Ensure you are using the correct ITR form applicable to your income sources.
- Calculate your tax liability accurately.
- Make the necessary tax payments, if any.
- File your ITR either online or by mail, following the prescribed procedure.
Rules for filing belated ITR
Taxpayers who submit their ITR forms after the due date are liable for a late filing penalty, which is governed by Section 234F of the Income Tax Act, 1961. The penalty amount is a percentage of the tax due and is applicable to individuals based on the following criteria:
- If the total income is less than ₹5 lakh: ₹1,000
- If the total income is more than ₹5 lakh: ₹5,000
Apart from the late filing penalty, taxpayers may also incur interest charges on any outstanding tax amount. The interest rate is one per cent per month, calculated from the ITR's due date until the date it is filed.
It is essential to bear in mind that both the late filing penalty and interest are calculated on a daily basis. Therefore, it is highly beneficial for taxpayers to file their ITR as promptly as possible to minimize any penalties and interest charges.
The cons of not filing ITR in time
Failing to file an ITR can have significant repercussions for taxpayers:
- Carry forward losses: Not filing an ITR means you won’t be able to carry forward any losses incurred in the current assessment year for future offset against income.
- Penalty: Taxpayers who do not file their ITRs may face a penalty, which can go up to 200 per cent of the assessed tax. The penalty will be imposed at a minimum of 50 per cent of the assessed tax, and it may increase based on the taxpayer's compliance history.
- Prosecution: In certain cases, taxpayers who willfully fail to file their ITRs, even after receiving notices from the Income Tax Department, may face prosecution.
- Loss of benefits: Not filing an ITR could lead to the loss of certain benefits, such as the ability to avail of loans or government contracts.
Given the serious consequences, it is crucial to file your ITR on time. If you find yourself unable to file by the due date, it is essential to promptly communicate with the Income Tax Department to explore your options and avoid further complications.
To recap, the consequences of not filing an ITR include the inability to carry forward losses, the possibility of a penalty, potential prosecution, and the loss of certain benefits. Thus, timely and proper filing of your ITR is of utmost importance.