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15 Feb2022
  • By Authored by CA Rahul Pareva
  • Category Income Tax
  • Views 794
The due date specified u/s 139(1) of the Income Tax Act, 1961 for filing the Income Tax returns is the date by which the returns can be filed without having to pay any late fee. Not filing the ITR on time can lead to the imposition of a penalty and other consequences and inconveniences discussed in detail below.

The due date for filing the Income Tax returns for Individual/HUF/AOP/BOI for the financial year 2020-21 was initially extended from 31stJuly 2021 to 30thSeptember 2021 due to the second wave of Covid-19 in the country. It was then extended to 31stDecember 2021 following complaints about technical glitches in the new Income Tax portal to file the returns.

What if you missed filing the return within the due date?

If you missed the due date for filing your return of income for FY 2020-21, you can still file your ITR as a ‘belated return’. The Income Tax department specifies the due date of filing the belated return, which is 31stDecember (unless extended by the government) following the financial year for which return filing has been missed.

However, CBDT has extended the last date for filing the revised or belated return for financial year 2020-21 from 31stDecember 2021 to 31stMarch 2022.

Late Fee for default in furnishing return of income u/s 234F

According to section 234F of the Income Tax Act, filing the ITR post the deadline can make the assessee liable to pay a maximum penalty of Rs.5,000.

Hence, for financial year 2020-21, if the assessee files his ITR after 31stDecember 2021, the penalty of Rs.5,000 would be levied. However, as a relief to the small taxpayers, the Income Tax department has provided that if an assessee’s total income is not more than Rs.5 lakh in the relevant financial year, then the maximum penalty levied for the delay will be only Rs.1,000.

Hence, late fee for FY 2020-21 will be levied as follows -
 
Return Filing Date Total Income Below Rs.5,00,000 Total Income Above Rs.5,00,000
On or before 31st December 2021 Nil Nil
After 31st December 2021 Rs.1,000 Rs.5,000

Interest for default in furnishing return of income u/s 234A

As per section 234A, interest is attracted for failure to file the return of income within the applicable due date mentioned under section 139(1).

In such case, simple interest @1% per month or part of the month is payable by the assessee for the period commencing from the date immediately following the due date of filing the return and ending on the date of furnishing of the return.As mentioned earlier also, for the financial year 2020-21, the due date for furnishing the return was 31stDecember 2021.

The interest has to be computed on the tax amount remaining unpaid, i.e., the amount of tax payable on net total income as reduced by the advance tax paid and any tax deducted or collected at source.

No interest under this section shall be charged on self-assessment tax paid by the assessee on or before the due date of return filing.

For example:

If Mr. Verma files his return of income for FY 2020-21 on 18thFebruary 2022 and if his unpaid tax amount is Rs.85,000, then the interest amount payable by him on 18thFebruary 2022 while paying his tax liability will be calculated as follows -

Interest amount = Rs.85,000*1%*2 (January and February) = Rs.1,700

Note: The extension of the due date for filing the ITR for FY 2020-2021, as mentioned above, was not applicable for calculation of interest under this section for the assessees whose net tax liability payable exceeds Rs.1,00,000 for this year. In the case of such assessees, the interest under this section would be calculated from the date immediately following the original due date of filing the return, i.e., 31st July 2021, and not from the extended due date, i.e., 31st December 2021.

For example:

If Mr. Mehta files his return of income for FY 2020-21 on 20thFebruary 2022 and if his unpaid tax amount is Rs.1,20,000, then the interest amount payable by him on 20thFebruary 2022 while paying his tax liability will be calculated as follows -

Interest amount = Rs.1,20,000*1%*8 (August, 2021 to February, 2022) = Rs.9,600

Interest for non-payment or short payment of advance tax u/s 234B

As per section 234B, interest is levied for default in payment of advance tax. Such interest is charged if the advance tax paid by the assessee is less than 90% of the assessed tax.

Advance tax is payable by the assessee during the financial year if the estimated tax liability of the assessee during that year exceeds Rs.10,000.

Under this section,the taxpayer is liable to pay simple interest at 1% per month or part of a month on the amount of unpaid advance tax.If there is a short payment of advance tax, then interest is levied on the amount by which advance tax is short paid.

The interest as per this section is levied from the first day of the assessment year till the date of actual payment of the tax.

Hence, for FY 2020-21, the interest for non-payment or short payment of the advance tax would be calculated from 1stApril 2021 till the date when the tax is actually paid. Therefore, if you have made default in the payment of the advance tax and have not filed the return yet, you must file it and pay the tax at the earliest to avoid paying interest for every additional month.

Interest for default in payment of instalment(s) of advance tax u/s 234C

As per section 234C, the taxpayer is liable to pay simple interest @1% per month or part of a month for short payment or non-payment of individual instalment(s) of advance tax.

Interest under this section is levied for a period of three months, in case of short payment or non-payment of 1st, 2ndand 3rdinstalment and for one month, in case of short payment or non-payment of the last instalment.Such interest is levied on the short-paid amount of instalment(s) of advance tax.

Hence, you must note that if you missed paying your advance tax instalment(s), if any, in time or short paid such instalment(s), you will have to pay the interest under this section also with the payment of self-assessment tax at the time of filing your return of income.

Carry Forward of Certain Losses Not Permitted

Another consequence of not filing the return on time or filing a belated return is that the assessee would not be allowed to carry forward the following losses, if any, for set off against income in future years if the return is not filed within the due date -

* Loss under the head ‘Capital Gains’, or

* Loss under the head ‘Profits and gains from business or profession’.

However, loss from house property and unabsorbed depreciation can be carried forward for set-off even though the return has not been filed before the due date.

Imprisonment for Failure to Furnish Return of income

As per section 276CC, if the assessee does not file his return of income, he might have to face imprisonment also. This happens when a person willfully defaults in filing the ITR to evade the payment of taxes.

As per the provisions of this section, the assessee shall be punishable as follows:

* in a case where the amount of tax payable exceeds twenty-five hundred thousand rupees, the assessee shall be punishable with strict imprisonment for a minimum of six months which may extend to seven years with fine;

* in any other case, the assessee shall be punishable with imprisonment for a minimum of three months which may extend to two years with a fine.

However, such provisions will not apply if:

* the assessee furnishes the return before the end of the relevant assessment year; or

* the net tax payable defaulted by such person (other than a company) for the year does not exceed ten thousand rupees.However, in the case of companies, the punishment is applicable irrespective of the amount of default.

In conclusion, it is crucial to file your income tax returns within the due date to avoid penalties and other consequences. Late filing can result in a maximum penalty of Rs. 5,000, but small taxpayers with a total income below Rs. 5 lakh may face a reduced penalty of Rs. 1,000. Additionally, interest is levied for late filing, non-payment or short payment of advance tax, and non-payment of advance tax installments. Filing a belated return may also lead to the inability to carry forward certain losses. Failure to file returns willfully can even result in imprisonment. To avoid these issues, it is advisable to file your returns on time and fulfill your tax obligations responsibly.


Don't delay, file your belated return now to avoid penalties and interest charges! For any Queries, Mail us at info@manishanilgupta.com.

Disclaimer: The information provided in this blog is for general purposes only and should not be considered as professional advice

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