If an individual misses the income tax return (ITR) filing deadline (i.e., December 31, 2021 for this year), then he/she will have to pay a penalty at the time of filing belated ITR. (Click here to find out how much penalty one will have to pay for missing the ITR filing deadline.) However, there are certain individuals who can file their ITR without paying a penalty even after the expiry of the deadline.
Let us take a look who will not have to face penal consequences for missing the ITR filing deadline.
Who will not have to pay penalty
As per income tax laws, not everyone is required to pay penalty for filing ITR after the expiry of the deadline. If a person whose gross total income does not exceed the basic exemption limit, files a belated ITR, then he/she will not be liable to pay penalty on late filing.
“There will be no late filing fees to be levied as mentioned under section 234F on the ITR filed after the deadline if the gross total income does not exceed the basic exemption limit. Gross total income as mentioned in section 139(1) refers to the total income before taking into account the deductions under section 80C to 80U under the Act,” says Abhishek Soni, CEO, Tax2win.in, an ITR filing website.
As per current income tax laws, the basic tax exemption limit applicable to an individual depends on the tax regime chosen by him/her. If an individual opts for the new tax regime, then basic exemption limit will be Rs 2.5 lakh irrespective of his/her age.
However, if an individual opts for the old tax regime, then basic exemption limit depends on the age of the person. Currently, the basic exemption limit for resident individuals below the age of 60 years is Rs 2.5 lakh. For senior citizens aged 60 years and above but below 80 years, income up to Rs 3 lakh is exempted from tax. For super senior citizens (those above the age of 80 years), the basic exemption limit is up to Rs 5 lakh.
Exceptions to the above rule
However, there are two exceptions to the above rule. The first exception to the rule is mandatory filing of ITR for certain section of individuals even if their gross total income does not exceed the basic exemption limit.
Shalini Jain, Tax Partner, People Advisory Services, EY India says, “If a person satisfies any condition mentioned in the seventh proviso to Section 139(1), then he/she has to mandatorily file ITR for FY 2020-21, failing which the fee under section 234F would be levied.”
Individuals who fall under seventh proviso to Section 139(1) are as follows:
a) who have deposited an amount or aggregate of the amounts exceeding Rs 1 crore in one or more current accounts maintained with a banking company or a co-operative bank; or
b) who have incurred an expenditure of an amount or aggregate of the amounts exceeding Rs 2 lakh for himself or any other person for travel to a foreign country; or
c) who have incurred expenditure of an amount or aggregate of the amounts exceeding Rs 1 lakh rupees towards consumption of electricity or;
d) who full-fill such other conditions as maybe prescribed.
Therefore, if you are required to file ITR mandatorily due to any of the conditions mentioned above, then ensure that you have filed your tax return before the deadline or else late fee will be levied even if your gross total income is below the taxable limit.
Second exception is if you hold foreign assets such as stocks of a foreign company. If you are an ordinarily resident individual with income from foreign assets and your taxable income is below the threshold limit, then you will have to pay the penalty if you don’t file ITR before the deadline.
“As per fourth proviso to Section 139(1), if you are a resident individual (other than not ordinarily resident within the meaning of Section 6(6) of the Act), holding any asset (including any financial interest) outside India, such as stocks of a foreign company, as a beneficial owner or you are a beneficiary of any asset or have signing authority in any account located outside India, then you are mandatorily required to file income tax return before the due date even if the total income is below the taxable limit. In such cases, if you file your ITR after the deadline, late filing fees would be levied as per provisions of the law,” says Jain.
