As the saying goes, “Better late than never,” but when it comes to filing your income tax return (ITR), failing to meet the deadline can have serious consequences.
Taxpayers who have yet to file their income tax returns for the financial year 2022-2023 should take immediate action. The deadline of December 31, 2023, represents the final chance for individuals to fulfil this obligation. However, failure to meet this deadline comes with penalties and interest for late filing. Therefore, it is vital to understand the consequences and the significance of timely filing.
Late filing fee and interest charges
The initial deadline for submitting income tax returns for the fiscal year 2022-2023, also known as the assessment year 2023-2024, expired on July 31, 2023. Individuals who were unable to meet this deadline now have until December 31 to file their ITRs.
It is important to realise that the December 31 deadline applies to all taxpayers, including individuals, corporations, those undergoing audits, and those not undergoing audits.
In accordance with Section 234F of the Income Tax Act, individuals who fail to file their returns before the due date will be subject to a late filing fee. For those who missed the deadline, the penalty is ₹5,000. However, taxpayers whose total income remains below ₹5 lakh will only have to pay a reduced penalty of ₹1,000.
In addition, if a taxpayer files their return late, they will be charged interest under section 234A. This interest is calculated at a rate of 1 percent for every month, or part of a month, on the amount of unpaid tax.
Consequences of non-filing
Failure to file ITRs at all can have significant consequences. Taxpayers will not be able to carry forward losses from the current assessment year, and penalties may be imposed for non-compliance. Penalties can range from 50 percent to 200 percent of the assessed tax, depending on the extent of non-compliance.
Updated return option
Despite missing the December 31 deadline, taxpayers can still file an updated return within 24 months of the end of the relevant assessment year. The Finance Act, 2022 introduced this provision to allow a longer duration for filing the return of income. However, filing an updated return incurs additional income tax liability. Filing updated returns does not incur any penalty or fee. Nonetheless, taxpayers must pay additional tax as per Section 140B of the Income Tax Act.
Requirements for filing updated returns
Taxpayers must file their updated returns using the ITR forms that were notified for the respective assessment year. This should be done along with the form ITR-U. It is important to note that updated returns cannot be submitted for claiming a tax refund. Taxpayers must adhere to the original filing deadline for refund claims.
Possibility of prosecution
In severe cases involving high-value discrepancies, there is a possibility of prosecution being initiated against delinquent taxpayers. It is crucial to fulfil tax filing obligations to avoid legal consequences.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
More
Less
Published: 13 Dec 2023, 11:44 AM IST