Income Tax Return (ITR) we all must have heard about it. But the thing is do we know the consequences of not filing an ITR. Surely not. The last date for filing ITR of FY 2018-19 is 31st July 2020. This article will give you brief about consequences of non filing of Income Tax return.
What is Assessment Year (AY)?
The financial year is the period from April to March of the next year, and assessment year is the year in which tax is paid and the return of the tax paid of the financial year is filed. Therefore, the income earned in FY 2018-19 will be assessed in AY 2019-20(except in some cases).
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What are the different types of ITR?
| Type of ITR form | Assessee who will file the ITR |
| ITR 1 | For Individuals Resident (other than not ordinary residents) having total Income up to Rs.50 lakh, which includes- a) income from Salaries, b) income from one House Property, c) Other Sources (Interest etc.), and d) Agricultural Income up to Rs.5,000/- |
| ITR 2 | For Individuals and HUFs not having income from profits and gains of business or profession and having income more than Rs 50 lakh, includes- a) Income from more than one house property, b) lottery and other types of gambling, horse races, agricultural income (of above Rs. 5,000), c) capital gains, d) assets located outside India |
| ITR 3 | For individuals and HUFs having income from profits and gains of business or profession |
| ITR 4 (Sugam) | For Individuals, HUFs and Firms (other than LLP) being a Resident having Total Income upto Rs.50 lakhs and having income from Business and Profession computed under sections 44AD, 44ADA or 44AE (Not for an Individual who is either Director in a company or has invested in Unlisted Equity Shares) |
| ITR 5 | For persons other than:- a) Individual, b) HUF, c) Company and d) Person filing Form ITR-7 |
| ITR 6 | For Companies not claiming exemption under section 11 (like charitable trusts, schools or colleges, etc) |
| ITR 7 | For persons including companies required to furnish return under section- a) 139(4A)- charitable and religious trusts b) 139(4B) – political parties c) 139(4C) or 139(4D) – entities claiming exemption under Section 10 d) 139(4E) – business trusts e) 139(4F) – investment funds referred to in Section 115UB. |
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What are the Last date of filing of ITR?
Following are the due dates for filing Income Tax Return without any late fee-
| Category of Taxpayer | Due Date for Tax Filing – FY 2018-19 |
| Individual | 31st July * |
| Body of Individuals (BOI) | 31st July * |
| Hindu Undivided Family (HUF) | 31st July * |
| Association of Persons (AOP) | 31st July * |
| Businesses (Requiring Audit) | 31st October |
| Businesses (Requiring Transfer Pricing Audit) | 30th November 2019 |
However, all the taxpayer who are liable to pay tax are also liable to file their ITR before the prescribed time limit as stated above. Those person not filing their ITR on time will be liable to pay fine under section 234A and for the penalty under section 234F prescribe under Income Tax, Act 1961.
*Last date of filing an ITR for AY 2019-20 was 31st July, 2019 which was further extended to 31st Aug, 2019. Due to COVID-19, the last date of belated ITR is 31st July, 2020.
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What if you didn’t file an ITR before prescribed time period?
The time limit prescribed by Income Tax Act is the last date to file an ITR. All the taxpayer who are required to file an ITR must file the same before the time limit. If in any case taxpayer doesn’t file its ITR on time then he will be consider as assessee in default and will be liable to pay penalty or late fees. However if any taxpayer fails to do the same, can file belated Return. Belated Return is introduced for the taxpayers who were not able to file Return on or before due date for any reason.
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What is belated Income Tax Return?
The Income Tax Act prescribe the last date of filing of ITR( as discussed above) for all types of tax payer who are liable to pay tax in FY 2018-19 and also liable to file their ITR. If any assessee intentionally /unintentionally not able to file its ITR on time then still Income Tax Act allow a another cut-off date to File an Return . The another last date of filing an ITR of AY 2019-20 is 31st March, 2020 which is further extended by our finance minister Nirmala Sitharaman to 31st July, 2020.
The assessee who file their Return after actual date but before 31st July, 2020 that Return will be known as belated ITR. That ITR will be considered as valid but assessee will be liable to pay the penalty or fine which will be imposed by Assessing officer.
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What will be the amount of penalty which the assessee will be liable to pay?
| Filed on | Maximum Late fee |
| After due date but before 31st December, 2019 | 5000 |
| After 31st December 2019 | 10000 |
Note: If the total income of the person does not exceed Rs 5 lakh, the fee payable will not exceed one thousand rupees. Also, due to the COVID-19, no additional late fee/penalty will be charged for delay till 31st July, 2020.
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What will be the rate of interest on delayed payment of Income Tax?
When the Income Tax is paid after due date, it is considered as default and attract Interest u/s 234A. On unpaid Income Tax, interest @ 1% per month or part thereof will be charged till the actual date of payment of taxes. However, due to the COVID-19, interest @0.75% per month will be charged.
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What are the prosecution for failure to file Income Tax Return?
In case, you fail to furnish the tax return, you may receive notice of prosecution under section 276CC. Section 276CC says strict imprisonment for a term up to 7 years and amount imposed as fine.
Also, there are several instances where income tax return serves as a proof, including applying for a passport and taking a loan. Therefore, it is important for taxpayers to assess their tax position and furnish an ITR on a timely basis to avoid any potential adverse implications in the future.
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The author of above article is Shruti Jain.
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