All the salaried classes are required to file Income Tax Return (ITR) every year. The government has exempted those earning between Rs 2.5 lakh and 5 lakh but others are expected to file their income tax returns under the given deadline. A person can claim a refund for any excess tax paid/deducted during a financial year by filing ITR.
Usually, the final date to file income tax returns is July 31. However, the government had extended the deadline this year, in the wake of coronavirus crisis. In case taxpayers miss this deadline, they are allowed to file belated ITR with certain penalty charges, as per section 234F of the Income Tax (I-T) Act.
What is the penalty levied?
As per Income Tax rules, taxpayers are required to pay Rs 5,000 if return is furnished on or before the December 31 of the assessment year. The penalty increases to Rs 10,000 if the assessee files the return next year between January 1 and March.
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If the ITR is not filed at all, they will not be able to carry forward the losses of the current assessment year.
What are these consequences?
A penalty can be imposed on taxpayers which is minimum of 50 per cent of assessed tax or maximum 200 per cent of the assessed tax. Apart from this, assessee may also have to face prosecution also (rigorous imprisonment for a term up to 7 years and fine), in extreme and high-value cases.
This may happen in case the wilful default to furnish ITR and tax payable (after reducing taxes paid and TDS) exceeds Rs 10,000.
For those unaware, the deadline for filing ITR for FY 2019-20 has been extended to 30 November 2020.