The last date for your ITR filing for assessment year 2019-20 is August 31, so procrastinators are now beginning to run out of time. Delaying tax filing can prove costly.
The penalty for ITRs furnished on or before December 31 is Rs 5,000, but double that amount for later filings, there is the interest charged under Section 234A that builds up the longer you delay filing your tax returns.
In a recent tweet, Income Tax India stated that, “It has come to the notice of CBDT that an order is being circulated on social media pertaining to extension of due dt for filing of IT Returns. It is categorically stated that the said order is not genuine.Taxpayers are advised to file Returns within extended due dt of 31.08.2019.”
It has come to the notice of CBDT that an order is being circulated on social media pertaining to extension of due dt for filing of IT Returns. It is categorically stated that the said order is not genuine.Taxpayers are advised to file Returns within extended due dt of 31.08.2019 pic.twitter.com/m7bhrD8wMy— Income Tax India (@IncomeTaxIndia) August 30, 2019
The penalty for ITRs furnished on or before December 31 is Rs 5,000, but double that amount for later filings.
According to Cleartax, there is a relief given to small taxpayers – the Income Tax Department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1,000.
Keep in mind that the income tax exemption limit for senior citizens (60-80 years) is Rs 3 lakh, while that for super senior citizens(above 80 years) is Rs 5 lakh.
How to avoid the interest penalty?
However, the taxman has no intentions of letting the big tax idealists off easy.
If the tax evaded “exceeds Rs 25 lakh, the punishment could be 6 months to 7 years,” the Income Tax Department says on its website.
“Apart from penalty for late filing, interest under Section 234A at 1 per cent per month or part thereof will be charged till the date of payment of taxes,” says Cleartax.
Hence, the interest computation will start from the day after the deadline, or September 1. So, longer you delay ITR filing, more you have to pay the interest penalty.
However, filing ITR on time is in your interest, not only to avoid the above mentioned penalties but also to ensure timely refunds.
ITR filing increases your creditworthiness
If you miss the deadline, you can still file belated returns till the end of the assessment year.
“For example, the belated ITR of FY2018-19 can be filed until March 31, 2020. If you miss that deadline, you will never be able to file the tax return,” says Kuldip Kumar, Partner and Leader, Personal Tax, PwC India.
Even if you do not fall in the tax net, you must consider filing a ‘Nil Return’ to maintain a record.
Moreover, if you file ITR within the due date, you will be able to carry forward losses to subsequent years.
This can be used to set off against income in the coming years. Apart from house property loss, other losses incurred are not allowed to be carried forward to subsequent years.
There are several instances where income tax serves as a proof, including applying for a passport and taking a loan.
Moreover, regularly filing your ITR validates your trustworthiness and makes it possible for you to access financial benefits such as loans, credit cards and the like.