Income Tax Penalty

Do you fear the process of filing income return? Does the thought of late filing and income tax penalty fill you with dread? Well, the income tax season can be a bit overwhelming for most of us. With getting our finances to unearthing proofs of said investments, it’s a hectic time for all of us. Some people find filing their income tax returns an annual chore, some don’t have the time for it, and some just hate the complexities of the process so much, they pass it on to a professional. To which of these categories do you belong?

Well, whichever category you belong to, filing income tax is a must for every tax-paying citizen. If you miss the deadline, there’s an income tax penalty that you’re entitled to pay. In FY 2018-19, the last date to file your income tax returns was 31 August 2019. As of now, the government has announced the last day to file ITR for FY 2019-20 to be 31 July 2020, unless extended by the government authorities. If individuals fail to submit their ITR by the deadline, they will have to pay the penalty for late filing of an income tax return.

If you file your ITR after the deadline but before 31 December 2020, then an income tax penalty of Rs. 5000 will be levied on you. If you file your ITR between January 2021 and March 2021, then you will have to pay a penalty of Rs. 10,000 for late filing of the Income Tax Return.

In case your annual income is less than Rs. 5,00,000, then your penalty for late filing of income tax return is Rs. 1000

 

But there are some compelling reasons as to why you should not miss the ITR filing deadline. Listed below are a few of them.

• Less time for revisions – One of the most common reasons people dread filing their Income Tax Returns is because there’s scope for mistakes to happen. And even the smallest mistake can cause you unnecessary worry and stress. Add to that the deadline is looming over to filer income tax returns and you have to be doubly sure that no mistakes have been made. As per the revised government rules, you only have time till the end of that particular assessment year to make any changes or revisions to your ITR.

Earlier, the window to rectify mistakes and resubmit ITR was 2 years. Then the government changed this period to just 1 year from the end of the financial year. Which means that the sooner you get done with your Income Tax filing, the longer you have to spot errors and apply for rectifying your ITR file. Apart from having to pay an income tax penalty, avoiding the hassle of having to resubmit erroneous ITR is a good reason why you should pay heed to the deadline.

• Interest due on tax– When you don’t file your income tax returns by the given deadline, you don’t just end up paying the penalty for late filing of income tax return but also have to pay interest at the rate of 1% on the tax amount you are liable to pay. And the longer you delay filing your Income tax returns, the more interest you end up paying. So, the smarter and more cost-efficient choice is to follow the deadline and submit your income-tax return well before that.
• No interest on a refund– Very often, individuals who have paid excessive taxes end up getting a refund from the government after they have filed their Income Tax Return. However, if you miss the deadline, you not only pay an income tax penalty, but you also forfeit this benefit of gaining a refund from the government.
• Cannot carry forward losses– Usually, when you have incurred losses in your business, you have the provision of carrying forward losses to the next financial year. However, if you’re delayed in filing your income tax returns, apart from paying the penalty for late filing of the income tax return you also will not be permitted to carry forward your losses for set off against income in future years.

Some important dates to keep in mind for 2020

• Deadline for filing belated Income Tax Return for FY 2018-19 is 31 March 2020. In case you miss this deadline, you won’t be able to submit your ITR for that year unless you’re asked by the government to do so. You will also be liable to pay an income tax penalty of Rs. 10,000 for late filing of ITR
• Collect TDS certificates from your employers and banks starting 15 June. Your employer will have to give you Form 16 which is crucial for filing ITR
• The deadline for filing ITR for FY 2019-2020 is 31 July
• Deadline for linking PAN and Aadhar cards has been extended to 31 March 2020. If you don’t link your PAN card to your Aadhar card by the given deadline, your PAN card will become inoperative

These days, filing Income Tax Returns isn’t as complicated as it used to be. With e-filing possible, a lot of taxpayers choose to file their ITR by themselves. However, if you need assistance or are unable to understand how to go about filing your ITR, it is best to consult an expert. They will not only guide you on how to file ITR easily but also explain why this process is so important. Every taxpayer should aim to file their ITR before the deadline. It might be a necessary chore, but it is better than having to pay an income tax penalty or not getting the refund for which you’re eligible. So, file your income tax returns on time and save yourself from having to deal with legal hassler later on.