- A taxpayer is liable to pay late ITR filing fees of maximum of Rs 10,000
- CAs are of the view that if a person whose gross total income does not exceed the basic exemption limit files a belated return, he/she will not be liable to pay penalty.
The penalty you will have to pay
An income taxpayer is liable to pay late ITR filing fees of:
a) Rs 5,000 if tax return is filed after the deadline but on or before December 31 of the relevant assessment year (Not relevant for FY 2019-20 as the last date to file ITR for FY 2019-20 is December 31, 2020).
b) Rs 10,000 if tax return is filed after December 31 but before the end the relevant assessment year, i.e., before March 31 (in this case between 1 January 2021 and March 31, 2021).
Also read: How to file ITR? Here's the complete guide
If you are a small taxpayer whose total income does not exceed Rs 5 lakh then the maximum fees you are liable to pay is Rs 1,000 if the ITR is filed any time after the expiry of the deadline (i.e. December 31, 2020) but before March 31, 2021.
This law of levying late filing fees under section 234F was introduced in the Budget 2017 and became effective for financial year 2017-18 or assessment year 2018-19 onward. Assessment year is the year immediately following the financial year for which the ITR is filed. The assessment year for the financial year 2019-20 is 2020-21.
Who will not have to pay?
However, chartered accountants are of the view that if a person whose gross total income does not exceed the basic exemption limit files a belated return, he/she will not be liable to pay late filing penalty.
"There will be no late filing fees to be levied as mentioned under section 234F on the income tax return filed after the deadline if the gross total income does not exceed the basic exemption limit," says Soni.
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 i.e. of age 80 years and above, the basic exemption limit is up to Rs 5 lakh.
Shalini Jain Tax Partner, People Advisory Services, EY India says, "Section 234F draws reference of persons liable to pay late filing fees for filing belated income tax return from Section 139 of the Income-tax Act. Section 139(1) of the Act states that the following persons have to mandatorily file ITR: (a) a company or a firm/LLP irrespective of quantum of income and (b) any other person only if his total income exceeds the maximum amount not chargeable to tax, i.e., basic exemption limit."
Exceptions to the above rule
However, amendments were made in the Income-tax Act, 1961 via Budget 2019 effective from financial year 2019-20 or assessment year 2020-21 onward, where it was made mandatory for a certain section of individuals to file the income tax return even if their gross total income does not exceed basic exemption limit. These include individuals:
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 fulfill such other conditions as maybe prescribed.
Jain says, "If a person who is not required to file an income tax return under other provisions of Section 139(1) of Income-tax Act, 1961 satisfies any of the condition included in the newly inserted seventh proviso to Section 139(1), he/ she will be required to file an income tax return for the FY 2019-20, failing which, the fee under Section 234F of Income-tax Act, 1961 would be levied."
Therefore, if you are required to file ITR 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.
"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 of the I-T Act," explains Soni.
This can be explained with the example of a resident individual aged less than 60 years. Suppose in a particular financial year you have earned salary income of Rs 2.45 lakh and interest income from savings bank account Rs 6,000. Remember, you are allowed a deduction on the interest earned from savings bank account under section 80TTA up to Rs 10,000. Here, the total income is Rs 2.51 lakh. Therefore, you will be liable to pay penalty as mentioned under section 234F if you file a belated return despite tax liability being zero.
Another case liable for late ITR filing fee
There is another case where you would be liable for late ITR filing fee even though your gross total income is below taxable limit and you are not required to file return as per the above mentioned criteria. That case is as follows: If you are an ordinarily resident individual with income from foreign assets and your taxable income is below the threshold, 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 as a beneficial owner or a beneficiary 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.
Let us say in a financial year you earned a total income of Rs 1.5 lakh from dividend of shares you hold in a foreign company. In that case, even though your income is below the minimum exemption level of Rs 2.5 lakh, you are still mandatorily required to file ITR.
Taxpayers with gross total income less than the basic exemption limit, filing ITR after the due date will be able to claim deductions as available under section 80C to 80U of the I-T Act and/or tax refund, if due, without paying any late fees, clarifies Soni.
File ITR in time to get more interest on refund
Yes, there are some of you who will not be penalised for filing your ITR late, however, it is in your best interest to file ITR before the deadline if any tax refund is due.
"This is because if the ITR is filed before the due date, then interest payable on tax refund will be calculated from April 1 of the relevant assessment year to the date on which refund is granted. In case a belated ITR is filed, even though no penalty will be levied as income is less than the tax-exemption limit, the taxpayer would lose out on some of such interest. In such event, interest will be calculated from the date of filing ITR to the date on which refund is granted," explains Soni.
Also, you will not be able to carry forward losses, except in case of loss from house property, if you file a belated return.
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42 Comments on this Story
sharma64 days ago
how a NRI acoount holder obliged to file ITR if he/she purchase property in India
Fatema 239 days ago
Here are some more things to know file filing ITR:
Revised return under Income Tax section 139(5)-
Prevalidate bank account on Income tax e-filing portal-
e-Vault of income tax for advance security-
e-Verify your returns online-
1. Through Aadhaar- https://learn.quicko.com/income-tax-e-verification-aadhaar-otp
2. Through net banking- https://learn.quicko.com/income-tax-e-verification-net-banking
hope this helps!
Rohini461 days ago
I am a cancer survivor. after months of follow up got last tds certificate by 10.8.19 & h/o papers to tax consultant. due to metro digging his internet connection was down for >10days, t4 clients whose documents were received in July -their returns r still being submitted. I have long term capital loss paid excess advance tax [due to late clarification received from HDFC Standard Life for surrender value of ULPP ], now the govt will force me to pay penalty Rs.5000 too, although tax amount is refundable to me !! tax deductors were given 45 days extension but assessees only 1 month. The penalty should be 0 for all assessees who hv paid full tax liability by 31.3.19. My interest income is falling due to interest rates dropping to keep capitalists & business houses happy, dividend is falling because those with cash reserves prefer buybacks, expenses r rising because in the real world prices of all daily essentials r rising irrespective of what inflation index govt calculates - now inspite of complying and paying all taxes i will hv to forgo Rs.5000 of my hard earned income.