The due date for filing Income Tax Return (ITR) for the financial year 2021-22 or assessment year 2022-23 is July 31, 2022. If you have already filed the return or manage to file it before the due date, that is well and good. But, what if you fail to file ITR before the July 31 deadline?
If you miss the July 31 deadline, you can still file the return till December 31, 2022. However, you will have to pay a late fee. This will have some other financial consequences as well.
For taxpayers whose annual income is up to Rs 5 lakh, the late fee is Rs 1,000. If your annual income is more than Rs 5 lakh then the late fine is Rs 5,000.
However, if your gross total income does not exceed the basic exemption limit, you will not be liable to pay penalties for late filing.
The basic exemption limit depends on the income tax regime you choose. Under the old income tax regime, the basic tax exemption limit for taxpayers below 60 years of age is Rs 2.5 lakh. The basic exemption limit has been fixed at Rs 3 lakh for people in the age group of 60 to 80 years. For people above 80 years of age, the exemption limit is Rs 5 lakh.
Under the new concessional income tax regime, the basic tax exemption limit is Rs 2.5 lakh, irrespective of the age of the taxpayers.
Gross total income means the total income after taking into account deduction u/s 80C to 80U of the Income Tax Act.
There are many other implications of missing deadlines besides late fee charges. If you miss the deadline, you will have to pay interest on late payment of taxes.
“Some tax may be payable while filing ITR for example interest and dividend. TDS is deducted at 10 per cent but you are in 20 per cent or 30 per cent tax slab, so the difference amount of tax has to be paid along with interest Taxspanner co-founder and CEO Sudhir Kaushik said, at the rate of 1 per cent per month as per section 234A.
You can only collect the outstanding tax if you file the return before the due date. However, if you miss the deadline, you will have to deposit the outstanding tax with interest retrospectively from July 31. If the outstanding amount is paid after the 5th of any month, then interest for the entire month is to be paid at the rate of 1 per cent per month.
A taxpayer can reduce the liability by offsetting the loss from the business operation of the sale of assets against other income. However, the loss can be carried forward only if the ITR is filed before the due date.
“Loss (other than loss from house property) is not allowed to be carried forward, if you miss the due date. Loss on sale of property/shares/capital assets which were forced to be sold during Corona, They must be declared and filed before the due date,” said Sudhir Kaushik, co-founder and CEO, TaxSpanner.
As per Income Tax Law, business loss (other than speculative business) can be adjusted against any head of income except income from salary. Any unadjusted loss can be carried forward for the eight financial years immediately following the current financial year and adjusted against any business income as prescribed. For example, business loss incurred in financial year 2020-21 can be adjusted against business income in financial year 2021-22 and subsequent years.
You may get a notice from the Income Tax Department for non-filing or mismatch.
On the possibility of notice from the Income Tax Department, Kaushik said, “During the Covid pandemic many individuals have invested in equities as we are seeing while filing ITR and AIS (Annual Information Statement). Hence the mismatch of declared income/loss.” For tax notices can also be expected.”
If you miss the 31st July deadline, the last date for filing delayed income tax returns for the financial year 2021-22 is 31st December 2022.
If you also miss the deadline of 31st December 2022 for refund and damages, you will have to file an appeal for condonation with the Commissioner of Income Tax of your ward to carry forward the refund and loss. “If the reason is genuine, you can get permission,” Kaushik said.
If you owe tax, there is a huge penalty. “If you find additional income in AIS or other documents which were not declared in the original return or were not filed at all, you will be liable to pay additional tax of 50 per cent of this pending tax amount if you file the updated return within one year. And 100 per cent extra will have to be paid. If filing after one but before two years,” he said.
In case you miss the December 31 deadline, a new Form ITR U will have to be used for updated return and reason for updating your income. The reasons could be: Return not already filed; Income not reported correctly; Wrong head of income selected; forward loss reduction; reduction in absorbed depreciation; Reduction in tax credit u/s 115JB/115JC; Wrong rate of tax and others.