File ITR in time to prevent chaos later

The ITR filing deadline is 31 July 2022, and I am not in a position to file the tax returns by the due date. What are the implications if I file after the due date?

-B Sathvik Reddy, Railway Koduru

The due date for income tax return filing for the assessment year 2022-23 (financial year 2021-22) was 31 July 2022. If you have already filed the return or managed to file it before the due date, it's well and good. The Central Board of Direct Taxes (CBDT) may not extend the deadline this time as it extended the deadline for filing of ITR for FY 2020-21 to 31 December 2021. We assume that the last date was 31 July 2022 unless CBDT extended the deadline. ITR filing is mandatory for all assessees with an annual income of Rs. 2.5 lakh and above. Failing to file ITR will attract fines and penalties.

Congratulations! if you have already filed your returns for FY 2021-22. Being a responsible citizen, pat yourself on the back. The Income Tax Department may not clap for you like they honoured Thalaivaa Rajinikanth for consistently paying his taxes on time. But you can sleep peacefully without any concerns and financial losses. Ideally, one must file the ITR by 31 July every year without waiting or anticipating an extension. Those who fail to file the ITR by 31 July can still file the return by 31 December 2022.

However, they will have to pay a late fee and also have to face several other implications, including some financial consequences. The late fee is Rs. 1000 for the taxpayers whose annual income is up to Rs5 lakhs. The late fee is Rs 5000 for the taxpayers whose yearly income is more than Rs 5 lakhs. However, there is no penalty for late filing if the gross total income does not exceed the basic exemption limit. The total income before considering the deductions under sections 80C to 80U of the Income Tax Act is the Gross total income. Till the assessment year 2020-2021, the maximum penalty was Rs 10,000 if a taxpayer missed the ITR filing deadline.

Every taxpayer is entitled to lessen their liability by offsetting the losses from the sale of property, speculation and business operations against other incomes. Loss under the head "Profits and gains of business or profession" can be carried forward only if the return of income of the year in which loss is incurred is furnished on or before the due date of furnishing the return, as prescribed under section 139(1).

Such loss can be carried forward for eight years immediately succeeding the year in which the loss is incurred. However, it is not applicable in the case of a belated ITR. The losses can only be carried forward if the ITR is filed before 31 July 2022 or the extended due date. Carry forward of losses from house property is allowed.

The taxpayers who missed the ITR by the 31 July deadline are liable to pay simple interest @ 1 per cent, per month for delay in filing the ITR. In other words, if you have a tax liability, then you need to cough up one per cent additional interest retrospectively from 31 July 2022. In addition to this, the interest of the full month will have to be paid if the tax liability is remitted to the government on or after the 5th of any month. For those taxpayers who failed to file by 31 July, the deadline for filing the belated ITR is 31 December 2022 (for the financial year 2021-22).

Failing to file the belated returns by 31 December 2022 is regrettable. In case somebody misses even the belated returns deadline, i.e. 31 December 2022, then they would be required to file an appeal for condonation with the commissioner of income tax of the respective ward for refund and losses carried forward. The IT department has the option to honour or dishonour to grant permission, depending on the ingenuity of the cause.For those who have a tax refund, it is not possible to get the tax refunds from the CBDT until the ITR is filed. Also, they will lose interest on the tax refund amount, if any.

(The author is a SEBI licensed Research Analyst. The alumnus of the Indian Institute of Foreign Trade (IIFT), he had held leadership roles at National Geographic, Reliance Radio Television

Luxembourg, STAR TV, etc)