Penalty for late filing of Income Tax Return.

The last date for filing of returns is July 31. If you fail to file your returns by the final due date of a financial year, the Income Tax department will penalise you in specific ways.

According to the amended rules of Section 234F which came into effect from April 1, 2017, delay in payment of Income Tax returns can mean that you are liable to pay up to Rs 10,000 as penalty depending on when you file Income Tax your returns.

Also, if you are late in filing your returns, you also have to pay interest on the unpaid tax. This interest will be calculated on the outstanding tax and will increase with the delay in filing returns.

These rules have been brought in by the Income Tax department so that taxpayers file their dues on time. Hence it is important to file Income Tax returns on time to avoid these penalties.

Failing to file one’s tax returns by the final due date comes with certain disadvantages:-

According to Section 234F, if you fail to file your returns on time, you have to pay a penalty of up to Rs 10,000. If the Income Tax returns are filed after the return filing deadline but before December 31, the penalty would be Rs 5,000. If the returns are filed on or after January 1, the penalty goes up to Rs 10,000. However, if the total income of the taxpayer is less than Rs 5 lakh, the amount of penalty will be a maximum of Rs 1,000, a move meant to provide relief to the small taxpayer.

If you are late in filing your taxes, you cannot carry forward your losses (except loss from house property) from ‘Capital Gains’ or the ‘Profits and Gains of Business/ Profession’. If you are late in filing your taxes, you also have to pay an interest on unpaid.

Further, if you are eligible for refund and interest on that refund, you will not be receiving any interest on the refundable amount if you do not file your tax returns on time.

Interest on Late Filing of Income Tax Return

If you delay in filing your Income Tax returns you will also have to pay an interest apart from the penalty for late filing. This means that if you have taxes unpaid taxes to be paid and you have not filed your taxes by due date, you will be penalised.

Under Section 234A, you will be charged an interest amount of 1 per cent per month or part of the month of simple interest on the tax amount outstanding. The interest will be calculated from the due date for filing taxes in that financial year to the date when you actually file your return.

Suppose the due date for filing of taxes in a certain financial year is August 31 and you file your taxes on December 30In case your total outstanding is Rs 1,00,000 ( after taking into account advance taxes and TDS), interest will be charged at 1 per cent for 4 months. The total interest payable is thus Rs 4,000.

Situations under which it is mandatory to file returns on time?

You should always ensure that you file your Income Tax returns by due date if your income exceeds the exemption limit. Filing your Income Tax returns on time becomes very important if you have to deposit balance tax, you are expecting a huge refund or need to carry forward your losses.

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