The Income Tax Department has set certain penalty charges for a delayed income tax return. An ITR or income tax return for assessment year 2018-19 filed by the deadline of August 31 will save the assessee from any fine. The taxman has stipulated a penalty amount (fee for late filing of income tax return) ranging from Rs. 5,000 to Rs. 10,000 for filing of income tax return for assessment year 2018-19 after August 31, 2018, according to the department’s website – incometaxindia.gov.in. The amount of money charged as penalty or fine for a belated ITR increases based on the degree of delay.
Here are five consequences listed by the Income Tax Department in case of delayed filing of income tax return by assessees:
1.No option to make changes in return: The taxman gives the assessees meeting the stipulated due date (August 31 this year) a chance to make revisions in the same “at any time during the assessment year or before the assessment made whichever is earlier”, according to its website. That means the assessee can make changes to an ITR in one year, as against a two-year window allowed previously. For the income tax return this year (for financial year 2017-18, and assessment year 2018-19), a revision can be made till March 2019. However, in case of an income tax return filed in paper format (not electronic), it cannot be revised through online mode, according to the I-T department’s portal.
2.Penalty fee: The taxman has set a starting penalty fee of Rs. 5,000 for a belayed income tax return. However, this fee is applicable for an ITR filed between September 1, 2018 to December 31, 2018. For a further delay, a penalty fee of either Rs. 10,000 is charged, according to the I-T website. For persons with an income of up to Rs. 5 lakh, the fine is limited to Rs. 1,000.
3.Reduction in interest on refund: Did you know that the taxman grants the assessee interest on any excess taxes paid under certain conditions? Many times the taxpayer does not get the refund in due time, in such a case he or she is granted interest on delayed refund, according to the taxman. This interest is calculated at the rate of 0.5 per cent per month (or part of a month) calculated from April 1 of the assessment year till the date of refund. No interest is paid in case of a belated claim of refund, according to tax laws. Also, no interest is paid if the amount of refund is less than 10 per cent of the tax. That’s why missing out on the deadline costs the assessee some of the amount of refund. The refund is made to the assessee by way of credit to his or her bank account through an ECS (Electronic Clearance Service) transfer, according to the taxman.
4.Interest payable by assessee: Not filing the income tax return within the due date attracts interest on outstanding tax dues, according to the taxman. In such a case, the assessee is liable to pay simple interest at the rate of one per cent for every month (or part of a month) calculated from the date following the due date. That means a belated filing of income tax return not only reduces the refund amount, but also increases the amount payable by the assessee.
5.No carrying forward of losses: In case an assessee incurs a loss from any house property, such loss can be adjusted or set off against income of any other house property under certain conditions. Any unadjusted loss is allowed to be carried forward to eight subsequent years. In the subsequent years, such a loss can be set off only from income under the head ‘house property’, according to the I-T laws. In case of a belated income tax return, a loss other than one from house property cannot be carried forward, according to the taxman.