Timely filing of tax returns also eases the process of getting loans as most lenders in India require borrowers to submit their income tax return records. Moreover, filing ITR on time also means you will get your refunds as early as possible
NEW DELHI: The deadline for filing income tax returns (ITR) for fiscal 2019-20 is fast approaching. According to the income tax department, over 4.37 crore income tax returns for assessment year 2020-21 have been filed as of 28 December, up from 4.23 crore a day earlier. Due to pandemic-induced disruptions, the last date for filing ITR without attracting any penalty has been extended many times, with the latest one being on 31 December.
We look at the consequences of the late filing of ITR.
For individuals having income from salary, house property, or capital gains, and those whose accounts are not required to be audited, 31 December is the last date for filing ITR for FY19-20.
“In case the person misses the deadline, there is Section 234F, under which he or she will be liable a penalty of ₹10,000 in case the delay is beyond 31 December, and if the income does not exceed ₹5 lakh, then the penalty is of ₹1,000, which is a mandatory penalty, which taxpayers have to file with the ITR," said Prakash Hegde, a Bengaluru-based chartered accountant.
The second consequence of missing the deadline would be that while the individuals will be able to carry forward the house property loss, they will not be allowed to carry forward the loss from business and capital gains. A loss carry forward is an accounting technique that allows a taxpayer to set off the losses in the relevant financial year against future gains if the return is filed within the due date.
Apart from these two penalties, interest under Section 234A at the rate of 1% per month will be charged till the date of payment of taxes.
Individuals should note that late returns can be filed till 31 March, 2021, on payment of these penalties. Till three years ago, in case anybody filed a late return, no revision was allowed in the return, but now taxpayers can file revised ITR.
However, in case an individual fails to file ITR altogether, the income tax department can initiate proceedings for prosecution for a term of three months to 2 years. If tax due is above ₹25 lakh, the period may be extended to seven years. The tax department can also impose penalties in case of under-reporting of income.
Remember, that timely filing of tax returns also eases the process of getting loans as most lenders in India require borrowers to submit their income tax return records. Moreover, filing tax returns on time may also mean that you will get your refunds as early as possible.