Each assessment year (the year right after the financial year for which the tax is filed), the Income Tax Department provides a four-month window from April to July for taxpayers to file their ITR (Income Tax Returns) for the previous year. However, in most cases, the deadline is extended to allow more compilation of taxes. For FY 2019-20, the last date for ITR filing is November 30. In case you fail to report your taxes within this stipulated time frame, you would be incurring late filing charges and penalties.
Here all you need to know about the penalty on late filing of ITR and related charges:
What is the penalty for late filing of ITR?
The Budget 2017 introduced late filing fees on ITR under Section 234F. Thus, as an income taxpayer in India, if you record your taxes after the given timeline (November 30, 2020), you will be liable to pay:
₹5,000, if the return is applied after the due date, but before 31st December of the assessment year (in this case, 31st December 2020)
₹10,000, if the tax is reported after 31st December, but before the end of the assessment year (in this case, 31st March 2021)
₹1,000, if the tax filer earns below ₹5 lakhs and reports the taxes before 31st Mar 2021
However, in case your Gross Total Income is below the taxable limit, you will not be charged any fee, even for the late filing of ITR. Presently, the basic income tax limit for people below 60 years of age is ₹2.5 lakhs. For those older than 60 years but less than 80 years of age have been given an exemption up to ₹3 lakhs. In the case of super senior citizens, who are above 80 years of age, the Income Tax Department maintains the lowest taxable income limit as ₹5 lakhs.
Who has to file the ITR?
Section 139(1) of the Income Tax Act, 1961 states that a firm/LLP, irrespective of its earnings and an individual receiving more than the basic exemption limit, have to file for ITR. However, with recent amendments in the Income Tax Act, the below individuals also need to file for income tax returns:
People who have made deposits of ₹1 crore or more in one or more bank account
People who spent more than ₹2 lakhs or more on a foreign country trip
Persons who have accrued an annual electricity bill of ₹1 lakh
Persons who are covered under special conditions, such as Section 139(1)
People who are below the minimum taxable income but have earnings from foreign assets
So, if you belong to these categories, ensure to file your ITR in time.
What are the benefits of filing ITR early?
It is advisable not to miss the return filing deadline, and also good if you report your taxes well-in-advance. Timely recording of ITR will help you earn more interest on the tax return, if any. If you fill your ITR before the deadline, your interest will be calculated from April 1 of the concerned assessment year till the day the refund is given. However, if you file post the designated period, you will lose out on some interest. In such a case, the interest will be calculated from the day of filing of ITR till the date when a refund is granted. Moreover, late filing will not permit you to carry forward losses.
Start the income tax return process as early as possible to avoid last-minute complications, which could increase your tax burden.