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Explained: All about belated filing of income tax returns

A belated income-tax return attracts a late-filing fee under Section 234F of the Income Tax (I-T) Act

January 12, 2022 / 01:13 PM IST

The deadline for filing the income tax return (ITR) for the Financial Year (FY) 2020-21 or Assessment Year (AY) 2021-21 ended on December 31, 2021. But you can still file a belated return till March 31, 2022.

However, to file a belated return, you may have to pay a penalty and additional interest on taxes. Besides, there are a few limitations of a belated return. Read more to understand.

What is a belated income-tax return?

As the name suggests, a belated return is a return which is filed after the stipulated due date mentioned in the income tax rules. “Under Section 139(1) of the Income-tax Act (“the Act”), an assessee (other than company) whose accounts are not required to be audited by a chartered accountant has to furnish a return of his income on or before the July 31 of the relevant Assessment year,” says Shailesh Kumar, partner, Nangia & Co LLP.

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However, “if a taxpayer fails to do so, Section 139(4) of the Act allows a taxpayer to file a belated return up to three months before the end of the assessment year i.e. December 31 of the relevant assessment year or completion of assessment, whichever is earlier,” adds Kumar.

Keeping in consideration the pandemic induced hardship, Central Board of Direct Taxes (CBDT) extended the original return filing due date of July 31, 2021 twice to September 30, 2021 and then to December 31, 2021.

However, “it was anticipated that the ITR deadline would again be extended but it was not to be, as the MoF considered otherwise,” says Vivek Jalan of Tax Connect Advisory Services LLP, a consulting firm. So now, the last date for ITR filing for FY 2020-21 is 31st March 2022, by way of a belated return under the provisions of Section 139(4) of the Income Tax Act, adds Jalan.

So, make sure you file a return before 31 March and do not miss this deadline. Because, “if the March deadline is missed, then the taxpayer will not be able to voluntarily file the ITR. In such a case, the ITR can only be filed in response to a notice from the Tax department,” says Jalan.

Penalty and interest

If you missed the extended due date to file the ITR, you may have to pay a penalty to file a belated return.

“A belated income tax return attracts a late filing fee under Section 234F of the Income Tax (I-T) Act of Rs 1,000 incase the Gross Total taxable income during the financial year does not exceed Rs 5 lakh; or Rs 5,000 otherwise,” says Jalan.

However, “In case the Gross Total Income is below the basic tax exemption limit then no late fees need to be paid for a belated return too, subject to certain exceptions,” mentioned Jalan. The basic exemption limit is Rs 2.5 lakh for individuals up to an age of 60 years, Rs 3 lakh for individuals between the age of 60 years and 80 years, and Rs 5 lakh for those above the age of 80 years.

Besides that, if there are tax dues to be paid, they attract penal interest. “Interest under section 234A at 1 percent per month or part thereof will be charged on the unpaid tax amount. The calculation of interest will start from the date falling immediately after the due date, i.e., December 31, 2021 for AY 2021-22. If the outstanding tax liability is Rs 1 lakh or more, the interest will be levied from the original due date till the date of filing ITR. The original due date for AY 2021-22 was 31st July 2021,” says Jalan. So, the longer you wait to file the ITR the more you pay.

Limitations of belated income-tax return

Not only do you have to pay a penalty and interest on due taxes, there are certain limitations in the case of belated return.  “No loss under the head “capital gain”, “business and profession” and “loss from owning and maintaining race horses” will be allowed to be carried forward or set off from succeeding years. However, loss from the head “house property” and “unabsorbed depreciation” can be carried forward even in case of a belated return,” says Kumar.

Besides that, in case the taxpayer is eligible for a refund, the department pays an interest under Section 244A of the Act on such refund due on account of excess TDS/TCS/ advance tax. Where the return is filed within the original due date interest is received from the first day of the relevant assessment year. In case of a belated return interest is received from the date of furnishing the return of income thereby resulting in a loss of a portion of interest due to late filing of return, adds Kumar.

While you may have to pay penalty and interest to file a belated return,  you should still file the return if you are supposed to, as per income tax rules.
Ashwini Kumar Sharma
first published: Jan 12, 2022 11:05 am

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