The 30 September deadline for filing belated or revised income tax returns (ITR) for the assessment year 2019-20 (financial year 2018-19) is fast approaching. The last date for filing tax returns for AY 2019-20 was extended three times in the wake of the covid-19 pandemic. It was first revised till 30 June and later till 31 July.
Therefore, it will be better for you to file returns and not to wait till last minute in the hope of getting an extension. In case you want to make a change or correction in your original return filed for FY19, you can also file a revised return.
Also, as there is no relief on penalty on delay or interest on tax due in case you delay the filing of your belated return, it would make sense to file it as soon as possible. Let’s understand what is a belated return and how interest and penalty are charged on the same.
No relief from penalty and interest on tax due
Belated ITR is the return filed after the due date, which is generally 31 July of the assessment year (AY). For FY19, the due date of filing ITR was 31 August and the assessment year was till March 2020. Although the date of filing belated ITR has been extended, there is no relief from the late filing penalties and interest on unpaid tax dues.
In case the taxpayer misses the ITR due date (which was 31 August for FY19), a flat penalty of ₹5,000 will be levied when you file belated returns till 31 December, and ₹10,000 if you file after 31 December till 31 March.
For small taxpayers with income up to ₹5 lakh, a penalty of ₹1,000 is applicable in case of filing belated ITR till 31 March. Even if you file the belated return for FY19 by September, you will have to pay a late filing penalty of ₹10,000.
In case you had any tax dues while filing belated ITR, you will have to pay interest on the outstanding amount at 1% for each month of delay starting 1 September of FY19. Also, if you are liable to pay advance tax, you will have to pay interest on the delay or default on advance tax payment under the respective sections of the Income-tax Act.
“If the taxpayer has not paid advance tax for FY19 or discharged less than 90% of liability by advance tax, additional interest at the rate of 1% per month or part of the month will be levied till the date of the entire tax liability has been paid. Tax liability is calculated on the time of filing the return,” said Kapil Rana, founder and chairman, HostBooks Ltd, an accountancy firm.
Delay in refunds
In case you have a refund due, they will be delayed as the processing of refunds will only start after you have filed the tax return. The tax department pays interest on refunds from the date of filing of return in case of late returns, so in case of delay, you will lose on the interest on refund if there is any.
If you don’t file returns
In case you don’t file belated ITR within the due dates, the tax department can send a notice.
“If you have taxable income and do not file income tax return, you may end up paying penalty for concealment of income. In the extreme case, you may receive notice of prosecution,” said Vivek Jalan, partner at Tax Connect Advisory Services LLP.
If the deadline is not extended, it may be your last chance to file the tax return for FY19 as the tax the department doesn’t allow the filing of tax return after the due date. There is a lengthy process to file a return after the due date and is generally allowed only in special circumstances.