Actual cost of missing July 31 ITR filing deadline is much more than penalty However, there are certain other costs that an individual should know if they file a belated ITR
The last date to file the income tax return (ITR) for FY 2022-23 (AY 2023-24) is July 31, 2023. But individuals missing that deadline can still file their ITRs. It will be termed as belated ITRs. The last date to file a belated ITR for FY 2022-23 (AY 2023-24) is December 31, 2023.However, belated ITRs come with a cost.
Individuals have to pay a penalty of up to Rs 5,000 under Section 234F of the Income Tax Act, 1961, while filing belated ITRs. Small taxpayers whose taxable income does not exceed Rs 5 lakh in a financial year have to pay a penalty of Rs 1,000.
Individuals who miss the July 31 filing deadline may also have to cough up more than just the penalty. If such a person has to pay tax, then penal interest under Sections 234A, B or C, as applicable, will be levied. "Additionally," says Divakar Vijayasarathy, Founder and CEO, DVS Advisors, "over and above the tax, interest of 1% per month or part thereof for late filing of ITR and additional 1% on default in payment of advance tax shall be charged till the date of filing belated ITR."
If an income tax refund is due, that will be payable only if the ITR is filed and verified. However, no interest will be paid on the income tax return if a belated ITR is filed.
Those not filing their ITRs on time will also have to forgo the advantage of making use of certain losses, such as those from sale of mutual funds or equity shares. Vijayasarathy says, "If the ITR is not filed within the due date, losses, except those losses under the head house property, shall not be carried forward for set-off against future gains".
If the ITR is filed on time, such losses can be carried forward for 8 years. These can be set off against future capital gains to reduce the taxable income and, thereby, the income tax payable.
Income tax laws allow an individual to carry forward losses from capital gains, house property, business and profession, including speculation business and other sources.
There are other consequences as well if an individual misses the deadline to file ITR. Vijayasarathy says, "If an individual has not filed in his/her ITR, the assessing officer may make a best judgement assessment, after which a penalty may be levied at 50% of tax payable in case of under-reporting of income or at 200% of tax payable in case of misreporting of income. In extreme cases, the assessing officer may also issue notice under Section 276CC of the Income Tax Act for prosecution for failure to file income tax return, and the term of imprisonment shall not be less than 3 months, but may extend up to 2 years, with fine. And in cases of rigorous imprisonment, it shall not be less than 6 months, but may extend up to 7 years, with fine."
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This story originally appeared on: India Times - Author:Faqs of Insurances
