A taxpayer should file the correct ITR by the prescribed due date, i.e. 31st July.

Though there is an option to file a Belated return until 31st December, however, if you fail to file your Income Tax Return by 31st July, there could be some financial implications, such as: –

i) Penalties – Late fee will be attracted if the Income Tax Return is not filed within the due date.

ii) Additional Interest Liability – Additional Interest shall be levied on the unpaid tax amount.

iii) Carry-Forward of Losses are not permitted – Carry forward of Losses under various heads except Loss from House Property to subsequent years are not permitted.

iv) New Scheme u/s 115BAC cannot be opted – One cannot opt to pay taxes under the New Tax Regime to file ITR after the prescribed due date.

v) Punishment for Contravention u/s 276CC – Imprisonment and/or fine for failure of filing Income Tax Return shall be levied on the assessee who does not file his/her returns.

PENALTIES
If the ITR is filed after the due date, which is 31st July –

A] For people having an annual income of more than ₹ 5 lakhs, a late fee of up to ₹ 5,000.

b] Whereas for other small taxpayers, maximum penalty of ₹ 1,000 will be levied.

No penalty shall be levied in case of Individuals and HUF, if the income is up to ₹ 2.5 lakh. In case of any other Assessee, late fee shall be levied accordingly.

ADDITIONAL INTEREST LIABILITY
In case an assessee has unpaid taxes due and Income Tax return for the said period has not been filed till the prescribed due date, interest u/s 234A will be levied on the assessee, which will be charged at 1% per month or part of the month (simple interest) on the tax amount outstanding.

Interest u/s 234B and 234C will be charged if the assessee has net taxes (after reducing TDS credit) in excess of Rs.10,000 in the previous year, wherein he will be liable to pay Advance Tax.

Non-payment of Advance taxes would attract interest liabilities u/s 234B and 234C at the rate of 1% per month or part of the month (simple interest) on the defaulted advance tax amount under both charging sections.

If taxes due are not paid, ITR filing cannot be done. Longer tax filing delays would result in additional interest building up, raising the overall fine for late ITR filing.

CARRY-FORWARD OF LOSSES ARE NOT PERMITTED
All losses, except Loss under the head House Property, cannot be carried forward to subsequents years in order to avail the benefit of setoff. Make sure to file your return by the due date in order to avail the benefit of setoff.

In case you file your Income Tax return after the prescribed due date, it will be considered as a Belated Return and you won’t be able to carry forward these losses except Loss from House Property over to the following years to offset income in subsequent years.

NEW SCHEME UNDER SECTION 115BAC CANNOT BE OPTED

In order to opt to pay taxes under the New tax Regime, an assessee is required to file his Income Tax Return u/s 139(1) on or before the prescribed due date, i.e. 31st July. Hence, benefits of new regime might be lost if not filed within due date.

PUNISHMENT FOR CONTRAVENTION UNDER SECTION 276CC

If the taxpayer has knowingly and willfully neglected to file an income tax return, Section 276CC of the Income Tax Act shall be applicable.

For late filing of income tax returns, if the amount of tax due or evaded exceeds Rs.25 Lakhs, Section 276CC may be imposed and assessee can be sent to imprisonment for a period of 6 months to 7 years along with fine.

In all other circumstances, a fine and imprisonment ranging from 3 months to 3 years might be invoked.

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