As the deadline to file income tax returns for the financial year 2022-23 approaches on July 31, Revenue Secretary Sanjay Malhotra has already stated that the government will not extend the ITR filing deadline.
Following are the implications of missing the deadline
Late Fee
If you fail to file your ITR by the July 31 deadline, don't worry; you can still file a belated return until December 31. However, be prepared to pay a late fee.
The late fee under section 234F of the Income Tax Act will be ₹5,000 if the return is furnished after the due date. For those whose total income does not exceed ₹5 lakh, the late filing fee is restricted to ₹1,000.
Also Read: ITR filing 2023: over 5 cr ITRs filed for 2022-23 fiscal so far
Penal Interest
Apart from the late fee, if you have taxes due, you will also be liable to pay penal interest. Simple interest under section 234A of the Income Tax Act will be charged at a rate of 1% for every month or part of a month from the date immediately following the due date (July 31) to the actual date of filing the return.
Loss of Interest on Refunds
Filing your income tax return is the only way to claim a refund for excess taxes deducted. Timely filing is crucial to receive interest on refunds. Interest at 0.5% month is paid from April 1 till the date of refund if the ITR is filed within the due date (i.e., 31st July 2023 for individual taxpayers). However, if the return is filed after the due date, interest will be calculated from the actual date of filing to the date of refund granted, but not from April 1.
No Carry Forward of Losses
Apart from penalties and interest losses, filing a belated return also results in limitations. Non-filing of the return until July 31 will lead to the loss of carry forward of losses to future years, except for house property loss, which can be carried forward in case of late filing.
Fine and Imprisonment Provisions
The consequences for late filing go beyond financial penalties. The tax laws include provisions for additional penalties and possible imprisonment if the return is not filed on time and the due tax amount exceeds ₹25,000. The penalty under Section 276CC for late filing where the tax payable or evaded exceeds ₹25,000 is imprisonment of 6 months to 7 years and a fine, as highlighted to Money Control by Vivek Jalan, Partner at Tax Connect Advisory
It is crucial for taxpayers to file their income tax returns on time to avoid the above-mentioned consequences.