Putting off income tax return filing? Be prepared for heavy fines

No. You can file your returns till the end of the assessment year – March 31, 2021, in this case. That is, unless the government decides to extend all these dates again due to the pandemic.

Then why should I rush to meet the December 31 deadline?

Filing returns after the due date can attract late-filing penalties under section 234. Usually, you are allowed to submit your belated returns by December 31 (in normal years when July 31 is the due date to file your income-tax returns), by paying a late filing fee of Rs 5,000. “Beyond that (until March 31), a penalty of Rs 10,000 is levied. However, again, if your total income does not exceed Rs 5 lakh, the late fee is limited to a maximum of Rs 1,000,” says Sandeep Sehgal, Director, Tax and Regulatory, AKM Global, a consulting firm.

This assessment year, since December 31 is the extended due date, you need to be watchful of the penalties charged for returns filed between January 1, 2021 and March 31, 2021. “The Rs 5,000 late fee  will not come into the picture this year. The late-filing fee beyond January 1 and up to March 31 will remain unchanged,” says Karan Batra, Founder, Chartered Club. In other words, although the deadline to file your income-tax returns have been pushed back, the original timelines for fine post January 1 have not been pushed back. As a result, the higher fine for late-filing of income-tax returns (Rs 10,000 or Rs 1,000) applicable for returns filed between January and March will straightaway apply. However, a formal notification on penalties in the changed scenario is awaited from the I-T department

Moreover, you can simply not afford to delay if you have taxes to be paid.

For salaried individuals, differences between taxes paid and payable can crop up if all your incomes have not been accounted for in Form-16. You will have to clear your tax dues at the time of filing returns. “In case an assessee has unpaid tax dues, interest under section 234B will apply. If any of the tax amount is paid as self-assessment tax on or before June 30, 2020, then interest at the rate of 0.75 percent a month is payable and for the balance part, 1 percent a month is to be paid,” says Archit Gupta, Founder and CEO, Cleartax.

If your self-assessment tax due is over Rs 1 lakh, you will have to an additional 1 percent per month, which will be levied starting from August 1, 2020 till the month of filing returns.

Will my tax outgo increase because of delay at my end?

You need to especially careful if the tax payable is substantial. “In case return is not filed and you have income that is subject to tax, there could be a penalty, which could vary from 50 percent to 200 percent of the assessed tax. If the tax evaded is over Rs 25,000, it could also lead to rigorous imprisonment for a term up to seven years along with fine,” says Sehgal.

Likewise, you must make haste if your employer has deducted excess taxes. “In case you have a tax refund due, a delayed filing results in delayed processing of your refund,” says Gupta. At a time when cashflows are critical, it is unwise to contribute to delay in payment of tax refund.

Will I lose out on claiming any tax benefits?

You will be able to claim deductions under section 80C such as life insurance premiums, investment in equity-linked savings schemes (ELSS), and repayment of housing loan principal. Likewise, health insurance premiums and interest paid on home loans. “However, in case you have losses such as from business and capital losses, you cannot carry forward unless the ITR is filed within the due date. But, you can carry forward loss from house property,” explains Gupta.