The Income Tax Return (ITR) filing deadline is a crucial date that individuals and businesses must keep in mind each year. Filing your ITR within the specified deadline is not only a legal obligation but also a responsible financial practice. However, life can sometimes get busy, and you might find yourself unable to meet the deadline. So, what exactly happens if you miss the ITR filing deadline?
In this blog post, we will explore the consequences and implications of missing the ITR filing deadline. We will shed light on the penalties you may face, the potential loss of benefits, and the impact on your overall financial well-being.
What Are the Consequences of Missing the ITR Deadline?
For taxpayers in India, it is crucial to file their income tax return (ITR) on time. Failing to do so can result in various penalties and interest charges, which can be quite costly. Moreover, late filing of ITRs may even lead to employment suspension or termination by your employer.
When the deadline for filing your tax return in India is missed, several consequences may arise:
- Penalties: If your annual income exceeds Rs 5 lakh, a late fee of up to Rs 5,000 can be imposed, which may increase to Rs 10,000 if the ITR is filed after the deadline. However, if your income surpasses the taxable amount limit, you won’t incur any penalty, even if you file your ITR after the deadline, with a few exceptions.
- Interest Payment: According to Section 234A, taxpayers who fail to file their ITR within the prescribed due dates are required to pay an interest rate of 1% per month (or part of a month) on the unpaid tax amount. If the tax amount remains unpaid, the filing of ITR cannot take place. Interest calculation begins after the tax filing due date, typically July 31 of the respective assessment year. A longer delay in tax filing will result in a higher accumulation of interest, thereby increasing the overall penalty for late filing of ITR.
- Penalty under Section 271H: In addition to the late filing penalty under Section 234E, individuals who are unable to file TCS or TDS statements by the due date must pay a penalty ranging from Rs. 10,000 to Rs. 1,00,000. The penalty under Section 234E is a fine of Rs. 200 per day until the TCS or TDS is paid.
So, if you miss the ITR filing deadline, you do have the option to file a late tax return. However, it is essential to be aware that filing a belated tax return comes with its consequences, namely the imposition of a penalty.
What Is Belated Tax Return?
In India, a belated tax return refers to an income tax return that is filed after the due date specified by the Income Tax Department. The due date for filing income tax returns in India is typically July 31st of the assessment year (e.g., for the financial year 2022-2023, the due date would be July 31, 2023). If an individual or entity fails to file their tax return by the due date, they can still file it later, but it would be considered a belated tax return.
How to File a Belated Income Tax Return?
To file a belated income tax return (ITR) in India, follow these steps:
- Gather Necessary Documents: Collect all the relevant documents related to your income, deductions, investments, and other financial details for the assessment year for which you are filing the belated return.
- Choose the Appropriate ITR Form: Determine the correct ITR form based on your income sources and category. The Income Tax Department’s website provides detailed information on selecting the right form.
- Online Method: a. Visit the Income Tax e-Filing Portal: Go to the official Income Tax e-Filing portal at https://www.incometaxindiaefiling.gov.in/ and log in with your credentials. If you don’t have an account, create one. b. Select “Income Tax Returns”: Click on the “e-File” tab and choose the “Income Tax Returns” option. c. Fill in the Required Details: Select the assessment year and the applicable ITR form. Fill in all the necessary details, including personal information, income details, deductions, and taxes paid. d. Verify and Submit: Review the information provided and ensure its accuracy. After verifying, submit the return electronically using the portal.
What is Revised Return?
In the event that a taxpayer submits an original or belated income tax return (ITR) but later discovers an error or omission due to a genuine mistake, they have the option to file a revised return under section 139(5) of the Income Tax Act. A revised return allows for the correction of any inaccuracies or oversights made by the taxpayer in their previously filed return.
The deadline for filing a revised return is until 31st December of the relevant assessment year, provided that the assessment process has been completed. It’s worth noting that even a belated return can be revised within this time limit, and furthermore, a revised return can be revised again if there is a need to correct any errors or omissions identified in the initial revised return.
It is important to consider that taxpayers will be subject to a penalty if they miss the original deadline outlined in Section 234F. The penalty amounts are as follows:
- Individuals earning a gross income of up to ₹ 2.5 lakh are exempt from any penalties.
- Individuals earning a gross income between ₹ 2.5 lakh and ₹ 5 lakh will incur a penalty of ₹ 1,000.
- Individuals earning a gross income exceeding ₹ 5 lakh will be liable for a penalty of ₹ 5,000.
What Is Updated Return?
The Finance Act, 2022 introduced section 139(8A) now grants taxpayers the opportunity to disclose their actual income in case they have surpassed the deadline for filing a belated or revised return. This provision allows for the submission of an updated return within a 12-month period following the conclusion of the assessment year, with the income being subject to a tax rate of 25%. However, certain limitations are imposed, such as the inability to declare losses, reduced tax liabilities, or ongoing search/survey procedures. It is important to note that once an updated return has been filed, it is not permissible to file another revised updated return for the same year.
What Is Defective Return?
When an income tax return (ITR) is not filed correctly or contains errors, it can be deemed a defective return by the assessment officer. While online utilities have reduced the likelihood of such defects, it is crucial to heed any notices issued by the IT department regarding a defective return. If a return is declared defective and the issue is not rectified within 15 days of receiving the notice, the return will be considered invalid. In other words, it will be assumed that no return was filed, leading to the imposition of interest, fines, and penalties as applicable.
Missing the Income Tax Return (ITR) filing deadline can have significant consequences, including penalties, interest charges, and potential loss of benefits. It is essential to file your ITR on time to fulfill your legal obligations and maintain your financial well-being. If you do miss the deadline, you have the option to file a belated return, but it is important to be aware of the associated penalties. Stay proactive and ensure timely compliance with tax filing requirements to avoid unnecessary complications.