It is July and there is mad rush for filing the Income Tax Returns (ITR). A layman is under the impression that July is a now or never thing. July 31, which is the due date for salaried and small businessman, is not so sacrosanct as it is made out to be. Even if you miss this deadline, you can still file your ITR later. But there are certain consequences of filing tax returns after July 31. Let us see what these are.
Mandatory late fee
If you fail to file the ITR by July 31, 2018, you can still file it by March 31, 2019, beyond which your ITR can not be filed. However, if you file your ITR after July 31, 2018, but on or before December 31, 2018 you will have to pay a mandatory late fee of Rs 5,000 along with your ITR. Moreover, if you file it after December 31, 2018, but by March 31, 2019, the amount of late fee payable doubles to Rs 10,000.
For small taxpayers there is a cap of Rs 1,000 on the amount of late fee payable, in case you file your ITR after July 31, 2018, but by March 31, 2019. This applies to those whose total income, that is, the income after various deductions, does not exceed Rs 5 lakh for the year.
In case you feel that due to unavailability of some minor information, like interest on saving account of bank fixed deposit interest, you would not be able to file the ITR, it is advisable to file file the return with the available information before July 31, 2018 and revise it by March 31, 2019 as and when complete details are available. This will help you avoid the mandatory late filing fee.
Those who do not have income exceeding the basic exemption and who are not required to file their ITR can still file their ITR. Such taxpayers will not have to pay the lower amount of late fee of Rs 1,000 while filing their ITR.
Interest on delay in filing ITR
In addition to the late filing fee, you will have to pay interest at the rate of 1% for each month or part of the month of delay in filing of your ITR, on the amount of net tax payable by you. The amount of interest is calculated on the net tax liability after reducing the gross tax liability by subtracting the amount of tax deducted at source and advance tax paid by you. This amount of interest is calculated from July 1, 2018 till you actually file your ITR. This amount of interest will be over and above which you have to pay for your failure to pay advance tax at the rate of 1% from April 1, 2018 till date of payment of the tax as self assessment tax.
So in case you do not discharge your balance tax liability and are also not able to file your ITR by July 31, 2018, you are incurring interest of 2% per month for both the defaults running together. Even if you are not able to file your ITR due to any reason, at least pay the tax before July 31, 2018 to avoid this 1% monthly interest .
Please note you do not have any interest liability for delay in filing of your ITR if all you tax liability has already been discharged by March 31, 2018.
If you fail to file ITR by March 31, 2019
If you fail to file your ITR by March 31, 2019, you can not file your ITR on your own. However, the income tax officer can issue you a notice under the provisions of income tax law after this date for assessing income which has escaped assessment. In such cases the income tax department can levy a penalty on the amount of tax involved at 50% or 200% depending on the circumstances. This penalty is over and above your regular tax and interest liability. Moreover, the income tax department can also launch a prosecution if the amount of tax sought to be evaded exceeds Rs 3,000. In case the prosecution is successful, you could be sentenced to imprisonment for a period of between three months and seven years. While chances of this happening are remote, of late the income tax department has known to prosecute taxpayers for such violations too.
FILE TAX ON TIME
- Delay in filing tax returns can result in late payment fee as well as interest for the delayed period
- Tax authorities can also launch prosecution that could lead to imprisonment of three months to seven years
The writer is a tax and investment expert
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