Income Tax: File ITR before July 31 or face penalties
Just 15 days left to file the Income Tax Return for financial year 2016-17. If you have not filed it yet, then do it right now as it may attract penalty post July 31, 2017.
When we are talking about penalties, you might remember what Finance Minister Arun Jaitley had said while presenting the Annual Budget in February this year.
Jaitley had introduced a late filing fee under new provision of Section 234F under Income Tax Act. As per the rule, taxpayer will have to pay penalty of up to Rs 10,000 for late filing of ITR.
This had become a cause of concern for the taxpayers.
Now, if you are worried about paying extra over the delay in taxes, then you should not, atleast for now. The reason being the new provision of Section 234F will come into effect from next financial year.
But, does that mean you can delay? No, because there is another penalty which still exists.
The fines levied under section 234F for delays in filing income tax return will depend on the time frame of the hold-up. Defaulters will have to pay Rs 5,000 if taxes are paid after the deadline of July 31 but before December 31 of the assessment year.
Failing to file taxes by December 31 will mean a penalty of Rs 10,000 against the defaulter. However, taxpayers earning not more than Rs 5 lakh annually will have to pay only Rs 1,000 for the delay in filing income tax return.
Chetan Chandak, Head of Tax research, H&R Block India, said, "Currently, the penalty for late tax filing is applied as per the provisions of section 271F. The new provision will replace this section which leaves it on the discretion of an assessing officer to levy a penalty of Rs 5,000 if an individual fails to file returns before the end of the relevant assessment year."
Moreover, from next year onwards, the government has also reduced the maximum time allowed for filing returns. Till 31st March 2018, you have the opportunity to file return for FY 2016-17 as well as FY 2015-16 but from next fiscal, you will be able to file only for the year immediately preceding it.
"So in the AY 2018-19, you will be allowed to file return for FY 2017-18 and even if you miss the July 31st due date, you will be allowed to file delayed return any time before the end of the AY i.e. only till 31st March 2019. Government is also making conscious efforts in reducing the time allowed for completion of scrutiny assessment. It has already made the necessary amendments in law for this," Chandak added.
Other than this section 234A, interest @1% on tax due will also be applicable, if you miss the tax filing due date while you have tax dues. Not only this, in rare and extreme cases, if the Assessing Officer finds out that the taxpayer has wilfully failed to furnish the tax return in due time, the person might be subjected to prosecution.
Thus individuals failing to meet the July 31 deadline at the end of this month to file their returns may have to pay penalties as per the old rules as the new rules will be applicable from the assessment year 2018-19.
However, it is always recommended to file their tax return within the due date and avoid any sort of penalties.