Just 3 days left for filing ITR, what happens if you miss the deadline | Business Standard News

Clipped from: https://www.business-standard.com/article/pf/3-days-left-for-filing-itr-what-happens-if-you-miss-the-dec-31-deadline-121122901260_1.html

The due date for ITR filing for the fin ancial year 2020-21 (the assessment year 2021-22) has been extended twice

Income tax

Income tax returns (ITR) filing is one of the most important financial tasks every year. The deadline to file ITR for the financial year 2020-21 is December 31.

The due date for ITR filing for the financial year 2020-21 (the assessment year 2021-22) has been extended twice – first from the usual deadline of July 31, 2021, to September 30, 2021, and then to December 31, 2021.

The December 31 deadline is for individuals whose accounts are not to be audited. For companies whose accounts have to be audited, the ITR filing deadline has been extended to February 15, 2022, from the earlier extended deadline of November 30 and the original deadline of October 31, 2021.

Till 28th December, 4.86 crore ITRs were filed. The total number of ITRs filed for the assessment year 2020-21 (FY 2019-20) stood at 7.38 crore. It stood at 6.78 crore for FY 2018-19 and 6.74 crore for FY 2017-18. There has been a consistent increase in the number of ITRs filed over the years.

Clearly, a substantial number of people have not yet filed their income tax returns. The number of ITRs filed till December 28 is 2.52 crore less than the total number registered in the previous year. If we go by the average per day ITR filing trend, around 2 crore people are likely to miss the December 31 deadline.

What will happen if you miss the December 31 deadline? You can still file your return, but it will have financial implications.

Before delving into the financial implications, it is important to note the difference between ‘due date’ and ‘last date’ for ITR filing. The due date is the date by which ITR can be filed without paying any late fees. The ITR can be filed until the last date with paying applicable late fees. The last date for ITR filing for the assessment year 2021-22 has been extended to March 31, 2022, from the original deadline of December 31, 2021.

Assessment year (AY) refers to the year following the financial year (FY) in which income earned by you is assessed. For instance, FY 2020-21 the assessment year is 20221-22.

If you fail to file the ITR by the due date of December 31 you can still file the return called ‘Belated Return’. The belated return can be filed as per section 139 (4) of the Income Tax Act, 1961. However, the assessee would be liable to pay late filing fees and penal interest, and also forego interest benefits on excess taxes paid.

The late fee penalty for filing the ITR after the due date is upto Rs.5,000. Small taxpayers whose total taxable income during the financial year under review does not exceed Rs.5 lakh will have to pay a maximum penalty of Rs.1,000 if the ITR is filed after the due date but before the last date of March 31, 2022.

Please note that if your income is below the taxable limit then you won’t be required to pay any penalty. However, there is a catch! If a resident individual has income from foreign assets the late filing fees will be levied even if the gross income does not exceed the tax exemption limit. The basic tax exemption limit is Rs.2.5 lakh irrespective of the taxpayer’s age.

Until the financial year 2016-17, there was no penalty for filing belated tax returns. In 2017, provisions were added in the Income Tax Act for levying penalties on belated return filing. The penalty was introduced from the financial year 2017-18. The maximum penalty was set as Rs.10,000. Effective from FY 2020-21 the penalty has been cut to half. Now the maximum penalty stands at Rs.5,000.

However, it’s not just the late fee penalty that should bother you. There are other financial implications also of not filing the return within the due date.

If you fail to file the ITR within the due date, you will be required to pay penal interest on the unpaid tax liability if there is any.

Moreover, you will not be able to carry forward losses even if you have paid all the taxes in time. If there is any loss from business and profession including speculation business, short-term or long-term capital losses, or any other losses except for loss from house property upto Rs.2 lakh, cannot be carried forward.

If you are eligible to carry forward losses, you must file the return before the due date. Taxpayers are allowed to carry forward short-term and long-term capital losses to a maximum of eight assessment years immediately following the assessment year in which the loss was first computed.

Also, you cannot set off losses against the current year’s income if you fail to file the return before the due date.

Another important factor to note is that if you fail to file the return before the due date you will not receive interest on refund for the excess taxes paid for the period of delay.

There are speculations that the government may extend the due date further considering the COVID-19 situation. However, there are also chances that the date may not be extended. So, if you have still not filed your ITR, do it now.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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