The government gives its taxpaying citizens a 4 month of the window to consolidate their income details and file their income tax returns every Assessment Year (A.Y.) – from 1 April to 31 July for the previous year. This year due to pandemic worldwide, the due date for ITR filing of FY 2019-20 was extended to 10th January 2021. As it takes only a few minutes to file your ITR, this is more than reasonable. Aside from paying taxes on time, we must also file the returns by the given due date or face consequences. In this article, we will discuss the penalty for late filing of tax returns.
  1. Due date for filing ITR for Assessment Year 2019-20
  2. Late filing fees u/s 234F
  3. Benefits of filing ITR on time
  4. Consequences of not filing by due date
  5. How to file your return
  6. What if I miss the due date?

1. The due date for filing ITR for Assessment Year 2019-20

For the Assessment Year 2019-20, the due date for return filing was 31 August 2019. Many taxpayers believe that if they have paid their taxes, they have no further obligation. However, missing the ITR filing deadline has legal consequences. Effective from the financial year 2017-18, a late filing fee will be applicable for filing returns after the due date.

2. Late Filing Fees u/s 234F

Effective from the financial year 2017-18, a late filing fee will be applicable for filing your returns after the due date i.e. 31 August 2019 under section 234F. The maximum penalty is Rs. 10,000.If you file your ITR after the due date (31 August) but before 31 December, a penalty of Rs 5000 will be levied. For returns filed later than 31 December 2019, the penalty levied will be increased to Rs.10,000. There is a relief given to small taxpayers – the IT department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000.  

To summarise the section 234F:

Late Filing Fee Details as per section 234F
E- Filing Date Total income Below Rs 5,00,000 Total income Above Rs 5,00,000
Up to 31st August 2020 Rs 0 Rs 0
Between 1st September 2020 to 31st December 20 Rs 1,000 Rs 5,000
Between 1st January 21 to 31st March 21 Rs 1,000 Rs 10,000

3. Benefits of filing ITR on time

Filing your ITR on time does make you feel responsible and good about yourself, but the benefits don’t end there. Filing your ITR on time can benefit you in more ways:

1. Easy Loan Approval

Filing the ITR will help individuals when they have to apply for a vehicle loan (2-wheeler or 4-wheeler), House Loan etc.

2. Claim Tax Refund

If you have a refund due from the Income Tax Department, you should file your Income Tax Return on time to receive the refund as early as possible.

3. Income & Address Proof

Income Tax Return can be used as a proof of your Income and Address – mandatory when you apply for a loan or visa.

4. Quick Visa Processing

Most embassies & consulates require you to furnish copies of your tax returns for the past couple of years at the time of the visa application.

5. Carry Forward Your Losses

If you file the income tax return within the due date, you will be able to carry forward losses to subsequent years. This can be used to set off against income in the coming years.

6. Avoid Penalty and prosecution

The income tax officer can initiate proceedings for prosecution for a term of 3 months to 2 years and with fine if you don’t file your ITR. If the tax you owe exceeds Rs. 25 lakh, the period may extend to 7 years. The above proceedings shall not be initiated where the net tax payable does not exceed Rs. 3000. Further, the income tax officer may impose a penalty of up to 50% of the tax due in the case of under-reporting of income.

4. Consequences of not Filing by the Due Date

Apart from the penalty levied by the IT Department, there are other consequences that a taxpayer may face for late filing of returns:

a. Unable to set off losses

Losses incurred (other than house property loss) are not allowed to be carried forward to subsequent years. You cannot set off these losses against future gains if the return has not been filed within the due date. However, if there are losses under house property, carry forward of losses is permitted.

b. Interest on the delay of filing return

Apart from the penalty for late filing, interest under section 234A at 1% per month or part thereof will be charged till the date of payment of taxes. It is important to note that ITR cannot be filed unless taxes are paid. The calculation of the interest will start from the date falling immediately after the due date i.e. 31 August 2019 for AY 2019-20. So, the longer you wait the more you pay.

c. Delayed Refunds

In case you’re entitled to receiving a refund from the government for excess taxes paid, you must file the returns before due date to receive your refund at the earliest.

5. How to File your Return

Filing your income tax returns has never been easier. All you need is your Form 16. Login to Cleartax to file your return – it takes just seven minutes!

6. What if I miss the Due Date?

In case the taxpayer misses the due date to file his return, he can file a belated return. A belated return can be filed either by the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. For the current assessment year, a belated return can be filed any time before 31st March 2021 if the assessee fails to file his return on or before 31st August 2020.  

Frequently Asked Questions

  • What is the due date for filing the return for the FY 2019-20 i.e AY 2020-21 for Individuals?
Due date for filing the income tax return for the individuals is been extended to 10th January 2021 from last extended date 31st December 2020.
  • If I file my return in the month of September 2020 for AY 2020-21, interest under section 234A will be charged ?
    Interest under section 234F will be charged from the original due date that is 31st July 2020 if the tax liability is more than Rs.1,00,000.

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