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Penalty for Late Filing of Income Tax Return Research Team | Posted On Wednesday, July 31,2019, 04:27 PM

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Penalty for Late Filing of Income Tax Return



The deadline of August 31st 2019 to file Income Tax Return fast approaches. You need to take this deadline seriously. If you file ITR after the midnight of August 31st, you end up paying a penalty of Rs 10,000. But, if your income is below the tax exemption limit, you won’t have to pay a penalty, even if you miss the deadline.

What happens if you miss the ITR deadline? Well, you have to pay the late ITR filing fees as per Section 234F.  If you miss the August 31st deadline, but file ITR before December 31st 2019, (This is the relevant assessment year), then you must pay a penalty of Rs 5,000. If you file ITR after December 31st 2019, but before March 31st 2020, you have to pay a penalty of Rs 10,000. But, if you are a small payer (Gross total income does not exceed Rs 5 Lakhs, you must pay a penalty of just Rs 1,000).

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Penalty for Late Filing of Income Tax Return

When it’s Compulsory to File Income Tax Returns?

Tax filing is mandatory under Section 139(1) if:

  • Your total income exceeds the minimum exemption limit.
  • If you are an Indian resident with assets located outside India/you have financial interest in some entity, you must file ITR, even if income is below the exemption limit.
  • A Company/Firm/LLP, irrespective of quantum of income.

See Also: Why Income Tax Refund Gets Delayed?

When to Pay Late ITR Penalty?

According to Section 139(1), the gross total income is total income before taking into account tax exemptions under Section 10(38) and tax deductions under Section 80C to Section 80U of the Income Tax Act.

Let’s understand this with an example. You are an Indian citizen below the age of 60. You have earned annual salary income of Rs 2,46,000. You also have interest income from savings bank account of Rs 7,000 a year.

Now, you enjoy a tax deduction on interest earned in SB account up to Rs 10,000 a year under Section 80TTA. Your total income is Rs 2,53,000 a year.

You have to pay a penalty as mentioned in Section 234F on filing a belated return, even though tax liability is zero.

If you are an ordinary resident Indian earning income from foreign assets, you will have to pay the penalty for late ITR filing, if you miss the tax filing deadline.

See Also: Why File ITR Before the Deadline?

What is Late Income Tax Return?

If you are not able to file ITR by the due date, you can still file belated ITR within a period of a year from the assessment year or before the completion/conclusion of the assessment year, whichever is earlier. However, you (assessee) will incur a penalty of Rs 5,000 under Section 271F of the IT Act. There’s no penalty for those whose returns are not required, even if returns are filed after year of assessment.

Late Filing of ITR:

  • You cannot carry forward losses from ‘Capital Gains’ or ‘Profits from Gains of Business or Profession. (This doesn’t hold true for loss from house property).
  • You have to pay interest on unpaid tax. This is apart from the late tax filing penalty. You are charged an interest of 1% a month or part of the month of simple interest on outstanding tax amount. The interest is calculated from tax filing due date in the financial year, to the date when you actually file ITR.
  • Let’s say you are eligible for a tax refund and interest on the refund. You won’t get interest on the tax refund if you don’t file ITR on time.

See Also: How To File Income Tax Returns?

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