Missed December 31 2021, the deadline to file ITR? - Here are the consequences

The due date to file the income tax return (ITR) for FY 2020-21 (AY 2021-22) was December 31, 2022. Many people were hoping that it would be extended; however, no such relaxation was provided by the finance ministry. You should be aware of these five consequences if you have missed the deadline to submit your tax return. 

1. Late filing Fee

The late filing fee under Section 234F is charged if a person fails to furnish the ITR by the prescribed due date. The fee depends on the quantum of income and the date of filing of return of income. In general, the late-filing fee under Section 234F is Rs. 5,000; however, if a person's total income does not exceed Rs 5 Lakhs, the fee payable is Rs 1,000. 

Also Read: CAIT urges Govt to extend ITR filing deadline, defer GST hike on textiles & footwear

2. Levy of interest on tax payable

The interest under Section 234A is levied at 1% per month if Income-tax return is furnished belatedly. This year, the CBDT extended the due date to file ITR from July 31 to December 31; however, no relief was provided from the interest chargeable under section 234A if a person's tax liability exceeds Rs. 1 lakh. 

Now, since the extended due date has also been surpassed, even the taxpayers whose tax liability doesn't exceed Rs. 1 lakh shall be required to pay the interest under Section 234A. 

3. Restriction on carry forward of losses

If a taxpayer has incurred losses during the year and such losses couldn't be set off against the current year's income, the remaining losses can be carried forward to next year. Taxpayers are entitled to carry forward the capital loss, business loss, and loss from the activity of owning and maintaining race horses provided the return of income is filed on or before the due date. If such a return is not filed within the prescribed due date, the right to carry forward and set off is lost. 

Also Read: Due date for filing income tax returns for assessment year 2021-22 extended to Mar 15

4. Reduced interest on tax refund

The taxpayers are entitled to receive interest on income-tax refunds at the rate of 0.5% per month. The interest shall be payable only if the refund amount is not less than 10% of tax determined on summary assessment or regular assessment. 

If the assessee has furnished ITR on or before the due date and refund arises out of TDS, TCS or Advance Tax paid during the financial year, the interest shall be payable from April 1 of the Assessment Year to the date on which the refund is granted. If the ITR is not furnished by the due date, the interest shall be payable from the date of furnishing of return of income to the date the refund is granted. 

5. Notice from Income-tax dept

If a taxpayer has not furnished a return of income, the Income-tax Officer may issue a notice asking to submit it. Suppose the taxpayer doesn't submit the return even after the notice by the tax officer. In that case, he can proceed against the taxpayer by way of best judgement assessment based on available information and resources. 

(Tarun Kumar, Direct Tax Leader at Coherent Advisors.)