EXPLAINED! Penalty to prosecution! All that you may face for failing to file ITR by given deadline

In the backdrop of Coronavirus spread, the Narendra Modi Government showered much relief on ITR filers, which includes last date extension for FY 2018-19. Few weeks ago, the Government of India (GoI) extended the ITR last date for FY 2018-19 to 30th September, which is probably the last extension to file ITR in the above-mentioned period. According to tax and investment experts, one should not miss this deadline extension benefit as unlock restrictions are fast getting removed and business activities are on the rise. They said that if they fail to file their ITR within the given time, then the earning individual will have to pay the heavy penalty up to 50 per cent of the unpaid tax.

On why one should file one’s ITR for the FY 23018-19 by 30th September 2020, SEBI registered tax and investment expert Jitendra Solanki said, “After four lockdowns the Government of India has started lifting the restrictions paving way for the process of unlocking. The restriction will now be removed gradually and will be removed fully in due course. So those who have not yet filed ITR for the year ended 31st March 2019, will have to incur some additional costs when they finally file their ITR. Firstly they will have to pay a late fee of Rs 10,000 for filing the ITR belatedly. However, the amount of late fee is restricted to only Rs 1000 in case one’s total income, after all the deductions, is not more than five lakhs.” 

Solanki said that in case full tax in respect of the income was not paid before 31st March 2019 (either way of advance tax or in the form of TDS), the earning individual will have to pay 1 per cent interest at the rate on the shortfall for each month or part of the month beyond the due date i.e. 31st July 2019.

On what could be the result if an earning individual fails to pay ITR by 30th September 2020, SEBI registered tax and investment expert Manikaran Singhal said, “Since the ITR last date for FY 2018-19 has already been extended thrice from 31st March 2020, the final date i.e. 30th September 2020 seems to be the now or never date for filing of pending  ITR. So if someone has taxable income and adequate taxes have not been paid either by way of tax deduction at source or through advance tax or self-assessment tax, the income tax department can levy a minimum penalty of 50 per cent of the tax which remains unpaid for one’s failure to file the ITR. In addition to the penalty, one will have to pay the interest for the period of delay as well.”

Singhal said that in case the unpaid tax amount exceeds Rs 10,000 then the Income Tax Department may initiate prosecution proceedings against the earning individual whose ITR for FY 2018-19 remains pending post 30th September 2020.

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