Just 1 Day Left To File ITR: Check Financial Implications For Defaulters
Check due date and last date to file ITR, financial implications for defaulters, and more.
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Filing one's Income tax return (ITR) is one of the most important financial tasks that a person does every year. The deadline to file ITR for the financial year 2020-21 is 31 December 2021.
The due date for filing ITR for the financial year 2020-21 (the assessment year 2021-22) has been extended two times till now. It was initially moved from the usual deadline of 31 July 2021 to 30 September 2021, and eventually now to 31 December 2021.
Readers must note that the deadline to submit your ITR by 31 December 2021 is only applicable for individuals whose accounts are not to be audited.
On the other hand the deadline to file your ITR has been moved to 15 February 2022, for companies whose accounts require to be audited. For such companies too, the ITR filing deadline has been moved twice.
Over the years, there has been a considerable increase in the number of ITRs filed. In the financial year 2018-19, a total of 6.78 crore ITRs were filed.
Similarly, for the financial year 2020-21, a total of 4.86 crore ITRs have been filed till 28 December 2021. On an average this is approximately 2 crore less ITRs filed this year, which means almost 2 crore people can miss the final deadline and face its implications.
Hence, read on to find out what happens if you miss the 31 December 2021 deadline to fill your ITR. You can still file your return, but it will have financial implications.
Penalities of Filing ITR Late
Also, before we delve deeper into the financial implications of not submitting your ITR on time, we must be able to differentiate between the 'due date' and 'last date' for ITR filing. While the due date is the date by which ITR can be filed without paying any late fees, there is also a date called the 'last date' by which time, the ITR can be filed but along with paying a late fees.
Hence, readers must note that the last date to file your ITR for the assessment year 2021-22 has been extended to 31 March 2022, from the original deadline of 31 December 2021.
Here it is also important to note what an assessment year (AY) is. An AY basically refers to the year following the financial year (FY) in which income earned by an individual is assessed. For example, for FY 2020-21 the assessment year is 2021-22.
Additionally, if you fail to file the ITR by the due date of 31 December 2021 you can still file the return called 'Belated Return'. However, you would be liable to pay a late filing fees as well as a penal interest, along with having to forego interest benefits on excess taxes paid.
Readers must note that the penalty to file the ITR after the due date is up to Rs 5,000.
Therefore, small taxpayers whose total taxable income during the financial year under review does not exceed Rs 5 lakh will have to pay a maximum penalty of Rs 1,000 if the ITR is filed after the due date but before the last date of 31 March 2022.
Readers must note that if their income is below the taxable limit, then they shall not be required to pay any penalty. However, if a resident individual has income from foreign assets, then the late filing fees will be applicable upon him, even if his gross income does not exceed the tax exemption limit.
The basic tax exemption limit is Rs 2.5 lakh irrespective of the taxpayer's age.
Up till the financial year 2016-17, there was no penalty for filing belated tax returns. However, in 2017, certain provisions were added to the Income Tax Act for levying penalties on belated return filing and the penalty began to be charged to defaulters from the financial year 2017-18.
While previously the maximum penalty was set at Rs 10,000, it has been reduced to half from FY 2020-21, ie it stands at Rs 5,000 now.
However, there are financial implications beyond paying the late fee, if an individual fails to file the return within the due date.
Financial Implications of Filing ITR late
Any individual who fails to file the ITR within the due date, shall be required to pay a penal interest on the unpaid tax liability if there is any.
You shall not be able to carry forward losses even if you have paid all your taxes on time. That means that if any kind of loss has been incurred from business and profession including speculation business, short term or long term capital losses, or any other losses except for loss from house property up to Rs 2 lakh, you will not be able to carry it forward.
Otherwise, taxpayers are permitted to carry forward short-term and long-term capital losses to a maximum of eight assessment years immediately following the assessment year in which the loss was first computed.
You will not be able to set off losses against the current year's income if you fail to file the return before the due date.
If you fail to file the return before the due date you will not receive interest on refund for the excess taxes paid for the period of delay.
Thus, all in all, it is imperative for every earning citizen to file their ITR on time. While there are some speculations that the government may extend the due date a little further considering the COVID-19 pandemic, it is not advised to rely on this uncertainty.
Thus, if you have not yet filed your ITR, please do it now.
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Topics: ITR filing ITR for FY 2020-21
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