Late Filing of Income Tax Return Penalty

During the reading of the budget in 2017, the government introduced stringent rules for the filing of tax returns by individuals. All tax returns must be filed by the 31st of July every year. The date for filing tax by businessmen and companies has not changed as yet. The stringent rules have introduced a steep penalty for people who file their tax returns late. Some other rules were also introduced but these will be highlighted later on in this article.

Late Filing of Income Tax Return Penalty

income tax penaltyAccording to the AY 208-19, you are now going to be charged a minimum of Rs. 1,000, whenever you miss the 31st July deadline. The charges will be as follows:

Up to 31st December After 31st December
Income < 5 Lakh Rs. 1,000 Rs. 1,000
Income > 5 Lakh Rs. 5,000 Rs. 10,000

There are other penalties that will be levied on those who file their income tax returns late. These restrictions were in existence before the reading on the 2017 budget.

  • Whenever you are late in paying your income tax, you will have to pay an interest on the unpaid tax amount, starting from the date that the payment was due.
  • You will not have an opportunity to file a revised income tax return.
  • You will be scrutinized harder whenever you file subsequent income tax returns even after you have cleared the outstanding amount.
  • The income tax refund will be delayed since you will have filed late.

At the moment, you will not incur any fines if you manage to file the income tax returns during the assessment year. There is a provision that levies a further penalty of Rs. 5,000 if you go beyond the assessment year. Today, the income tax department does not have any mechanism of pursuing those who have as yet to file their income tax returns, but this will soon change and strict rules will be enacted after the 2018-19 assessment year. However, there is no need to feel panicked, since these rules and penalties will only take effect from the next assessment year, which begins on the 1st of April, 2018.

How to Pay the Late Income Tax Return Filing Penalty?

If you are yet to pay the income tax, when paying the penalty, you can bundle the two payments together. If you already paid the income tax, albeit after the deadline, you will have to pay the penalty as a standalone payment. In this case you will use the same form (Challan No. 280) to pay income tax, advance tax, penalties and any interest accrued.

NOTE: Income tax returns can only be filed after you have paid all your taxes in full, and any penalties that you may owe.

The Budget 2017 – New Income Tax Return Rules

There are some new relaxation rules that were introduced at the same time as the strict rules regarding the filing of income tax.

There is now one simple form which you will fill if you have an income that is less than Rs. 5 Lakh. This is a short form and will only be a page long. This form was made simpler so centralization of data can be achieved easily. The Income Tax department will have access to a lot of your personal information by using your PAN number.

The government has also waived these penalties or people who are filing their income tax returns for their first time. This will only be applicable if the filing is genuine, but if there are signs of tax evasion, the penalties will be applicable.

The government can now follow prosecution of any income tax evasion case that was filed within a period of 10 years; the limit for this had always been 6 years. The assessing officer would need to have some concrete evidence before pursuing such a case.

In Conclusion

It is your responsibility to file your income tax returns on time. The government will no longer extend the 31st July deadline, and a simple late filing could cost you up to Rs. 5,000. This means that you should be keen and make sure that you have reminders to file your income tax returns before the due date. Once you have finished accounting for your last financial year, you should file your income tax returns immediately.