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Is There Any Penalty/Late Fee On Late Filing Of Income Tax Return?

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The last date for filing income tax return for an individual assessee is 31st July. In spite of knowing the deadline sometimes you could not file your income tax return on time. As we know filing income tax return in most of the cases is compulsory but what if you miss the deadline of 31st July for filing your tax return? If you think you have to give penalty for filing late return then you are partially right. As government is little lenient for tax payers who fail to file there income tax return on time. Lets have a look what are the implications on missing the deadline for filing income tax return on time for you.

LateITR

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If You Do Not Have Any Net Tax Payable

Net tax payable is the amount of tax liability left after the TDS and advance tax payment. In simple words, Net Tax is total tax liability minus taxes paid.

If you have zero or negative balance of Net tax payable then you are relatively lucky. As in this case you are allowed to file your income tax return any time till the end of that assessment year. For instance, you missed to file your income tax return for the FY 2010-11 by 31st July 2011 and you have no net tax payable then in that case you file your return anytime till 31st March 2012 without any penalty.

But if you again miss your deadline i.e the assessment year (31st March 2012 in the above example)then you will be charged a penalty of Rs 5000.

You Do Have Some Net Tax Payable For The FY

Net tax payable is the amount of tax liability left after the TDS and advance tax payment. In simple words, Net Tax is total tax liability minus taxes paid.

If you have some balance of Net tax payable then in that case there are some financial implications. Although the basic funds is same where you can file your income tax return till the end of assessment year without paying any penalty. And if you file your income tax return after the end of the assessment year then you will be charged a penalty of Rs 5000.

Other than this, if you have some net tax payable balance then you will be charged a penalty of 1% per month on the outstanding tax payable amount (Starts from 31st July onwards).

For instance, you missed to file your income tax return for the FY 2010-11 by 31st March 2012 and you have a tax liability of Rs. 50,000 for the year, out of which Rs 25,000 has already been deducted as TDS (Tax Deducted at source) and you have paid an advance tax of Rs 15,000. Thus you net tax payable comes out Rs 15,000. You will be liable to pay a lump-sum penalty of Rs 5000 + 1% of 15,000 i.e. Rs 150 per month as late fees from 31st July onwards.

    • I : File income tax return before the end of assessment year

Say you file your income tax return on 16th October, 2011. In such a case you need to file your income tax return with 3 month late fee as partial months are considered as full months.

Amount payable = Net Tax Payable + Interest for 3 months at the rate of 1% per month

Thus, Amount payable = Rs. 15,000 + (3% of Rs. 15,000)
= Rs. 15,000 + Rs. 400
= Rs. 15,450

    • II : File income tax return after the end of assessment year

Say you file your income tax return on 12th May, 2012. In such a case you need to file your income tax return with a penalty of Rs 5000 and 10 month late fee as partial months are considered as full months.

Amount payable = Net Tax Payable + penalty of Rs. 5,000 + Interest for 10 months at the rate of 1% per month

Thus, Amount payable = Rs. 15,000 + Rs. 5000 + (10% of Rs. 15,000)
= Rs. 15,000 + Rs. 5000 + Rs. 1500
= Rs. 21,500

Drawbacks/Disadvantages Of Filing Late Return

With the above explanation we understand there is no penalty till the end of Assessment year. Then why is it important to file income tax return on time? What are the benefits?

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  • Not allowed to carry forward losses: If you have a loss from any of the heads of income (except for the head “Income from house property”), and you don’t file your income tax return on time, then you would not be able to carry forward your losses. Thus, you would lose the benefit of set off of these losses against the income of the next year. This includes Business loss, capital loss, Loss of Interest on refund etc.
  • You cannot revise your return.

2 comments

  1. DHARMESH LAKKAD

    sir, i have already filled my tax return of A.Y. 2011/12 on 30th march, 2012, but fail to pay tax of Rs. 12000/- now i want to know can i pay tax of A.Y. 2011/12 after 31st march 2012

  2. i wish to income tax return filling for f.y 2010-11 now on dt 16/06/2012
    this return is refundable tax for f.y 2010-11. pl guide me now filling of return, not payable any type of penalty,interest for reason of late filling of salaray incometax return

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