Unless the assessment year is prolonged, taxpayers must file a return of their income generated in a financial year by the 31st of July of the relevant assessment year.
Every Assessment Year or the AY which basically starts from 1st April and ends on 31stof July for the preceding year, the government allows its taxpaying residents a four-month window to combine all the details of their incomes earned from different sources and file their income tax returns or the ITRs along with the payment of the relevant taxes that they are liable to remit on the basis of their income earnings.
This is more than acceptable, given that filing your ITR simply takes a few minutes. We must not only pay our taxes on time, but we must also file our returns by the deadline or risk penalties which might come as a consequence to non or late filing. Penalty for late submission of tax returns will be discussed in this article along with what can be done if you miss the filing.
Assessment Year 2021-22 Due Dates for Filing ITR
The deadline for filing returns under section 139(1) for the Assessment Year 2021-22 was July 31, 2021. However, the Internal Revenue Service has extended the deadline for all taxpayers, as mentioned in the table below.
Many taxpayers feel that once their taxes are paid, they are free of additional obligations. Missing or crossing the ITR filing deadline, on the other hand, has legal ramifications. Returns filed after the due date will be subject to a late filing fee beginning in the fiscal year 2017-18.
- The ITR filing due date for FY 2020-21 in case of the individuals and also entities who are not liable for conducting of tax audit was extended to 31st of December 2021 from 31st of July 2021.
- The ITR filing due date for FY 2020-21 in case of taxpayers covered under the tax audit but excluding the transfer pricing cases was extended to 15th of March 2022 from 31st of October 2021.
- The ITR filing due date for FY 2020-21 in case of taxpayers covered under transfer pricing was extended to 15th of March 2022 from 30th of November 2021.
- The due date for filing the belated return or the revised return of income for FY 2020-21 or the AY 2021-22 is from the 31st of December 2021 to the 31st of March 2022.
Section 234F Applicability and Late Filing Fee
For the fiscal year 2017-28, if you file your returns after the due date. i.e., if you are filing a belated return, you will be charged a late filing fee under section 234F of the Income Tax Act. For example, after the deadline for FY 2020-21, which is December 31, 2021.
The maximum fine which shall be applicable would-be INR 10,000. A penalty of INR 5,000 will be imposed if you file your ITR after the due date which basically is 30th of Septemberbut before the date of 31stDecember.
The penalty will be doubled to INR 10,000 for returns filed after the 31st of December of the relevant assessment year in question. Small taxpayers are given a break, which means that the IT department has declared that if the total income of the taxpayer does not exceed INR 5 Lakh, the maximum penalty for late filing would be INR 1000.
So, we can say that:
- In case of Individuals or those with a total taxable income below INR 5 Lakh, a late filing fee under section 234F shall be applicable as below:
If they file the return on or before the 31st of September, the INR 0,
Between the 1st of October 2021 and the 31st of December 2021, INR 1,000, and
For filing done between the 1st of January and the 31st of January 2022, again INR 1,000.
- In case of individuals or HUF with a total taxable income above INR 5 Lakh, a late filing fee under section 234F shall be applicable as below:
If they file the return on or before the 31st of September, the INR 0,
Between the 1st of October 2021 and the 31st of December 2021, INR 5,000, and
For filing done between the 1st of January and the 31st of January 2022, again INR 10,000.
Benefits of Filing ITR Within the Due Date
Following are the benefits which can be enjoyed if one of the ITRs is filed within the due date:
Easy approval for loans
Individuals will benefit from filing the ITR when applying for a vehicle loan for say a two-wheeler or 4-wheeler, a business loan or even a home loan, and so on.
Earlier claiming of Tax Refund.
If you are due a refund from the Income Tax Department, you should file your tax return as soon as possible to ensure that you receive your refund within a due time and not causing any delay.
Income and Address Proof for Tax Payer
The income tax return can be used to prove your address and income, which is required when applying for a loan or visa in order to make the same simple and easy.
Quick and Easy Processing of VISA Application
Most embassies and consulates require you to submit copies of your tax returns for the previous two years when applying for a visa such that it can be processed easily without any complexities.
Carry forwarding of Losses.
You can carry forward losses to the upcoming years if you file your income tax return before the due date as provided by the Income Tax Act and further notifications are published. This can be utilised by deducting from the profits earned during the future years.
Avoiding of any Fines, Penalty or Prosecution
If you don’t file your ITR, an official from the Department of Income Tax can start criminal proceedings against you for a period of 3 months to even a period of 2 years, as well as a fine. The period may even be extended up to a period of ten years if the amount of tax you owe is huge or higher.
In the case where there is under-reporting of income, the income tax inspector may apply a penalty of up to 50% of the tax payable.
After Effects of Non-Filing of ITR within Due Date
The following problems or consequences shall be suffered by tax payer if ITR is not filed within the due date:
No Setting Off of Losses
Losses are not allowed to be carried forward to later years (save for residential property losses). If the return isn’t filed by the deadline, you can’t use the losses to offset future gains. If there are losses under residential property, however, losses can be carried forward.
Interest Levied on Delay
Apart from the penalty for late filing, interest at 1% per month or part thereof shall be imposed under section 234A until the taxes are paid.
It’s vital to keep in mind that the ITR cannot be submitted unless and until you remit all the taxes that you are liable to pay. Interest will be calculated from the date that falls immediately after the due date, i.e., 31 August 2019 for AY 2019-20. As a result, the longer you wait to pay tax and file ITR, the more cost you will have to bear.
Delay in Refund Credit
If you are eligible for a refund from the government for overpaid taxes, you must file your returns before the deadline to receive your refund as soon as possible.
Hence, we can say or conclude that filing of returns, if belayed, can take into various consequences which are serious. So, it shall always be advisable that the returns are filed on time without delay so that the entity or an individual taxpayer incurs no extra costs.
