Several income tax changes have come into effect from the beginning of this year, i.e., February 2020. Earlier, the Government of India used to offer a certain period to the citizens to consolidate all the details of their income and file the income tax returns for every fiscal year. Until last year the tax filing period used to start from April 1 to July 31. The process of income tax filing is a convenient process that can be done online—filing the return before the due date is equally important as paying your tax on time. The government earlier announced May 13, 2020, as the deadline for filing the income tax return for the financial year 2019-20 had been stretched to November 30, 2020. Also, the date for a tax audit is extended from September 30, 2020, to October 31, 2020.
Here, in this article, we will explain to you the penalty for late filing of income tax return and how to avoid the same.
According to the changes as per Section 234F of the Income Tax Act, which became valid on April 1, 2017, filing the income tax return(ITR) after the due date can make you liable for a penalty of Rs. 10,000.
Until last year, according to this act, if you do not file a tax return by July 31, but before December of that year, you will have to pay a fine of Rs. 5000. In case, if you file an income tax return after December of that year, the penalty will be raised to Rs. 10,000. This act is introduced for levying of compulsory penalty for late filing income tax return.
As per the Income Tax Department, if the annual income of an individual is not more than 5 lakhs, the maximum penalty on him for missing the deadline would be only Rs. 1000.
There are many demerits of not filing tax returns on time. In order to avoid submitting the fee for late filing of income tax return, you can follow the below-mentioned steps to prevent such a situation:
1.Reduce Time for Correcting your Return: Let us suppose you made a mistake while filing your income tax return. As per the new rules, you have the time till the assessment year to make the necessary change. Previously, the taxpayers had a two-year-long time frame to revise an incorrect income tax return. It is now reduced to one year from the end of the annual year. Thus, the earlier you file the return, you can avail of longer duration for revising your returns to make changes.
2.Interest Payment: In case if you do not file income tax returns before the deadline, you are required to pay the interest at the rate of 1% monthly, or part of a month, on the amount of tax that has not been paid according to Section 234A. You cannot file an income tax return until you have not paid the tax. The computation of penalty begins from the date immediately after the deadline for the current year. So, you will end up paying more if you delay. To avoid the penalty for late filing of income tax return for individual, he or she needs to file the ITR on time in respect of each assessment year.
3.Carry Forward of Tax Losses is Not Allowed: If you have borne any losses during the year, such as a loss under the head capital gain or any loss in the business, you must file a return within the deadline. If you fail to do so, you will not be able to carry forward the losses to the next year to set off against the income in the future.
4.Delay in Getting Tax Refund: If you are to receive a refund in case if you have paid increased tax. Then, you must file your return before the deadline so that you can get the refund on time.
Conclusion
Filling your income tax return has been simplified. For this, you need to get Form 16 as per Section 203, of the Income Tax Act, 1961.
Section 234F of the Income Tax Act is imposes penalty on an individual for late filing of income tax return.
In case if you have missed the deadline to file the return, you can file the belated return. It can be filed either by the end of that particular year or before the year gets over. If the income tax return is filed before the deadline, then payment of interest on a tax refund is assessed from April 1 of the relevant assessment year to the date on which the return is approved. While, in case of belated return, even if the penalty is imposed as income is lower than the limit of tax-exemption, you will lose out on some interest. In this case, the interest is assessed from the date of filing return to the date on which the return is approved.
Disclaimer: The above information is for reference purposes only. Please refer to policy terms and conditions carefully.
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