Friday, Dec 08, 2023

Here’s Why You Should Not Wait Till The Last Day To File Your Income Tax Return

Outlook Money

Here’s Why You Should Not Wait Till The Last Day To File Your Income Tax Return

There are implications of late filing of income tax return, including penalty. But that’s not all. The government is unlikely to extend the last date of filing of income tax return, which incidentally, happens to be a Sunday, too.

Here’s Why You Should Not Wait Till The Last Day To File Your Income Tax Return

If you have not yet filed your income tax return (ITR), and are hoping to file it on the last day, then don’t do so. It would be better if you file your tax return before the last day.


According to Section 139 of the Income Tax Act, 1961, the due date for filing of tax returns is July 31 of the relevant assessment year for all assesses other than a company, individuals whose accounts must be examined, and a few additional individuals. 


Also, Revenue Secretary Tarun Bajaj said on Friday that the central government is not considering extending the last date for filing of IT returns, as it expects most returns to come in by July 31. 


Having said that, there’s a catch. 


July 31 is a Sunday, which happens to be a bank holiday. 


Hence, taxpayers who are not much aware with how tax filing works, should not ideally wait for the last day to file their return. Besides, nowadays, income tax can be filed online 24x7 all through the year. 


However, experts say, it is advisable that taxpayers do not wait till the last day to file their returns, as there might be chaos and confusion, along with heavy Internet traffic, and server failure. 




You would have to pay a penalty, an interest of one per cent per month, in case of late filing. It is important to note that you cannot file your income tax return unless you pay tax. 


“The maximum penalty of Rs 5,000 will be levied if you file your ITR after the due date July 31, 2022, but before December 31, 2022. However, there is a relief given to small taxpayers – if their total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1,000,” says Archit Gupta, founder and CEO, Cleartax, a tax portal. 


Consequences Of Not Filing By The Due Date


The income tax officer can initiate proceedings against you if you wilfully fail to file your returns even after you have been issued with notices. You could be imprisoned for anything between three months and two years along with a fine. Where you owe a higher tax to the income tax department, the prosecution period could extend up to seven years. 


Further, the income tax officer could even impose a penalty of up to 50 per cent of the tax in case of under-reporting of income. 


Moreover, you are not allowed to carry forward any losses (other than house property losses) to subsequent years. 


“You cannot set off these losses against future gains if the return has not been filed within the due date. However, if there are losses under house property, carry forward of losses are permitted,” says Gupta. 


Also, when it comes to refund, in case you are entitled to receive a refund from the government for excess tax paid, you must file your return before the due date, to receive your refund at the earliest. 


In the last fiscal year (2020-2021), about 58.9 million ITRs were filed by the extended due date of December 31, 2021. In fact, over the last two financial years, the government had extended the deadline for filing ITRs to ease compliance for taxpayers in the wake of the Covid-19 pandemic.