Penalty for Late Filing of Income Tax Return – AY 2020 -21

The last date to file your ITR for the AY 2021-22 (FY 2020-21) is extended to 31st December 2021 for Individual taxpayers. Not filing your ITR on time can lead to a penalty, but there are also other consequences and inconveniences attached to the delay. Let us understand these in detail below.

Latest Update:
CBDT has issued a circular on 9th Sep 21 extending the timelines for certain direct tax compliances for AY 2021-22.
1. ITR Filing due date extension:
i) ITR filing by taxpayers not covered under audit is extended from 30th Sep 21 to 31st Dec 21
ii)  ITR filing for Tax audit cases is extended to 15th Feb 22 
iii) ITR filing for transfer Pricing is extended to 28th feb 22
iv) ITR filing of Belated or Revised Return for FY 20-21 is extended from 31st Dec 21 to 31st March 22

2. Furnishing Audit Report:
i) Due date to furnish the audit report is extended to 15th Jan 22
ii) Due date to furnish the audit report for transfer pricing cases is extended to 31st Jan 22

Penalty for Late Filing u/s 234F

As per the changed rules notified under section 234F of the Income Tax Act which came into effect from 1 April 2017, filing your ITR post the deadline, can make you liable to pay a maximum penalty of Rs 10,000. To break this down for current year; if you file your ITR for FY 2020-21 post 31st December 2021 (15th February 2022 for audit and 28th February 2022 for transfer pricing cases), no penalty will be levied. For returns filed after 31st December 2021, the penalty limit will be increased to Rs 10,000. However, as a relief to small taxpayers, the IT department has stated that if your total income is not more than Rs 5 lakh, the maximum penalty levied for delay will only be Rs 1000.

Late Filing Fee Details

Reduced Time for Revising Your Return

Let’s say you are filing your ITR and you end up making a mistake. Under the changed rules, you only have time till the end of relevant Assessment year to make the change (for ITRs from FY 2017-18). Earlier, taxpayers had a 2-year long window to revise and resubmit an erroneous ITR. This has now been decreased to one year from the end of the financial year. Therefore, the earlier you file, the longer would be the window available with you for revising your returns to rectify errors if any.  

Payment of Interest

If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A. It’s important to note that one’s ITR cannot be filed if one hasn’t paid the taxes. The calculation of penalty will start from the date immediately after the due date which is usually 31 July of the relevant assessment year (For current year i.e FY 2020-21, due date is 31st December 2021 for individual taxpayers). So, the longer you wait the more you will have to pay.

Carry Forward of Losses is Not Permitted

If you have incurred any losses during the year say a loss under the head Capital Gains or any loss in your business, make sure you file your return within the due date. Not doing so will deprive you of carrying forward these losses to the next years for set off against income in future years.

Delay in Receiving Refunds

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

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