The deadline for filing late income-tax return (ITR) for 2020-21 (Assessment Year 2021-22) is March 31. The last day for filing ITR for individual taxpayers was December 31, 2021. Due to the Covid-19 pandemic, the due date for filing late return was first revised to February 15 and then to March 31. If you have missed the December 31 deadline, make sure you don’t miss the March deadline.
Deepak Jain, chief executive, TaxManager.in, says, “If an assessee misses this deadline, he/she may receive a show-cause notice for undisclosed income. He/she will also have to pay a penalty and interest and will be deprived of certain benefits that come with meeting the tax-filing deadline.”
However, if a taxpayer, who has tax liability, fails to file ITR by the given last date, he/she may even face jail term for violation.
Consequences can be serious In case an assessee fails to file ITR by the extended due date of March 31, the income-tax (I-T) department could issue a notice through its compliance portal, seeking valid reason.
Maneet Pal Singh, partner, I.P. Pasricha & Co, says, “If the I-T department has reasons to believe you have escaped income on which tax ought to have been paid, assessment proceedings under Section 148 may be initiated. The I-T department can also levy a minimum penalty of 50 per cent under Section 270A on the tax that has been avoided by not filing ITR. This is in addition to the I-T and interest liability (until the date of filing ITR) you will have to pay.”
Penalty under Section 234F
According to Section 234F of the I-T Act, taxpayers must pay a penalty for delay in filing ITR.
In addition, a mandatory late fee of Rs 5,000 has to be paid if ITR is submitted after the due date of December 31, 2021, if taxable income is more than Rs 5 lakh. If taxable income is below Rs 5 lakh, the late fee is Rs 1,000.
Sometimes, a taxpayer is required to submit ITR even when he/she is not liable to pay any tax. This can happen when his/her gross total income exceeds the applicable basic exemption limit but does not exceed Rs 5 lakh, and no tax is payable due to the rebate under Section 87A.
Moiz Rafique, managing partner, Privy Legal Service LLP, says, “This can also happen when a taxpayer has to file ITR because he/she owns assets outside India, is signatory to an account outside India, or has spent on electricity or foreign travel beyond the specified threshold limit.” In such cases, the late fee is Rs 1,000.
Loss of benefits
Besides the aforementioned monetary penalty, a taxpayer also loses out on other benefits when he/she does not file his/her ITR on time. “If an assessee has incurred loss under any head of income, he/she must file his/her ITR by the due date, else carry-forward and setting-off losses in subsequent years are not permissible,” says Singh.
According to Aditya Chopra, managing partner, Victoriam Legalis-Advocates & Solicitors, “A taxpayer who fails to file his/her return before the due date also does not receive interest on refund for the excess taxes paid for delay period.”
Points to remember
Taxpayers need to bear the following in mind when filing a delayed return: “Clear your dues by paying your taxes first and only then file a deferred tax return,” says Jain.
With just one week to go, you could commit errors if you file your ITR in panic. “One should ideally avoid having to revise an already overdue return. Keep all supporting documents handy, like Form 16/16A, receipts of municipal taxes paid, home loan certificate, sale or purchase deed, statements of shares sold and purchased, proof of deductions claimed, etc. Then account for all of them properly while filing the return,” says Singh.
The most common mistakes are not mentioning certain incomes, like rental income, and forgetting to claim deductions on contributions to the Employees' Provident Fund. “Tax filers should also avoid providing incorrect bank information,” adds Chopra.