Interest and Penalty for Late Filing of Income Tax Return
by Team SuperProfs | Apr 5, 2018
Interest and Penalty for Late Filing of Income Tax Return. In this article we are going to provide information about Interest and Penalty for Late Filing of Income Tax Return that covers under Income Tax Act, 1961. There are some Interests and Penalty levied on the Late filing of Income tax return. Those Interests and penalty clearly explained in the Interest and Penalty for Late Filing of Income Tax Return article.
Income Tax Return is required to be furnished before 31st July/ 30th Sept of the Assessment Year. However, if the return is not filed before the due date, interest and penalty would be levied for the late filing of income tax return.
However, it should be noted that there are 2 things which a taxpayer is required to comply with every year:-
Payment of Income Tax
Filing of Income Tax Return
Delay in any of the two compliances results in levy of interest and penalty for the delay in compliance.
Interest and Penalty for Late Filing of Income Tax Return -Interest on Late Payment of Income Tax
Income Tax is required to be deposited with the Govt. in installments during the same year in which the income is earned. The income tax would be levied as per the income tax slab rates on the estimated income of the taxpayer and tax would be required to be paid on such estimated income.
The balance tax on the difference between estimated income and the actual income would be required to be paid at the end of the year.
This payment of income tax in installments during the same year in which the income is earned is called as Advance Tax. In case this Advance Tax is not paid as per the Schedule prescribed by the Govt, Interest would be levied @ 1% per month.
It should be noted here that income tax return cannot be filed till the time full income tax has been paid by the taxpayer. Income Tax Return can only be filed once full income tax has been paid by the taxpayer.
Interest and Penalty for Late Filing of Income Tax Return – Penalty for Late Filing of Income Tax Return
If the income tax return is not filed before the due date of filing of income tax return, a belated return under Section 139(4) can be filed at any time before the expiry of 1 year from the end of the relevant assessment year.
Therefore if the income is earned in the financial year 2013-14, the assessment year for the same would be 2014-15 and the return can be filed at any time before the expiry of 1 year from the end of relevant assessment year i.e. anytime before 31st Mar 2016.
However, the income tax officer may levy a penalty of Rs. 5000 under Section 271F for late filing of income tax return. This penalty is not levied in all cases and is at the sole discretion of the assessing officer.
At the time of late filing of income tax return – you won't be required to pay this Rs. 5,000 as penalty for late filing of income tax return. However, in case you receive a notice from the income tax officer for late filing of income tax return – in such a case you would be required to pay Rs. 5000 for late filing of income tax return.
In extreme cases, where the taxpayer wilfully fails to furnish the return in due time, may also levy penalty under Section 276CC i.e.
In a case where the tax is less than Rs. 25 Lakhs – the income tax officer may penalise with imprisonment for a term of 3 months to 2 years
In a case where the tax exceeds Rs. 25 Lakhs – the income tax officer may penalise with imprisonment for a term of 6 months to 7 years.
However, these penalties are levied in a very rare case. In most of the cases, the taxpayer is only required to pay interest @ 1% for late deposit of income tax.
Interest and Penalty for Late Filing of Income Tax Return – CONSEQUENCES OF LATE FILING OF INCOME TAX RETURN
Apart from penalty of Rs. 5000 which an income tax officer may levy for the late filing of an income tax return, there are several other drawbacks of late filing of income tax return which have been discussed below:-
Loss of Interest on Refund: If a refund is due to a taxpayer, interest on such refund won't be paid for the period of delay in filing of income tax refund.
Revision of Belated Return not possible: If the income tax return has been filed after the due date, such return cannot be revised by the taxpayer himself in case of any error.
Some Deductions under Section 80 are not available in case of late filing of income tax return.
If the income tax return is not filed before the due date, the taxpayer won't be allowed to carry forward losses arising under various heads except loss under head House Property and unabsorbed depreciation.
SuperProfs– India's Largest Online Coaching Platform is offering FREE Trail Classes for CA/CS/CMA. Now students from all over India can learn from India's Most Experienced Professors online and get their dream career.
Click Here To Register for your FREE Trial
Next UpApril 6, 2018
CPT Video Lectures For June 2018
Download CPT Video Lectures For June 2018 by ICAI. In the previous post, we have provided CPT Study Material and CPT…
PreviousApril 5, 2018
TCS on Sale of Goods or Services – Income Tax Act 1961
TCS on Sale of Goods or Services – Income Tax Act 1961. In this article we are going to provide…