For individuals the due date, every year, for annual Income Tax Return Filing is the 31st of July. With companies and LLPs, the due dates is the 30th of September. These type of organisations require tax audits. If these Income Tax Returns are filed late, what if income tax return is not filed, there are penalties and we look at these penalties in this article.
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Late Filing of Income Tax Returns – The Consequences
Penalties, and interest on late penalties, all come into play when taxpayers submit their annual income tax returns after the due deadline day. What if income tax return is not filed. There is also a list of other consequences that include:
• 1. Correcting Any Errors: Annual Income Tax Returns that are filed after the due date means that the taxpayer will not be able to correct any errors related to their Annual Income Tax Return.
• 2. Delayed Refunds: If an Annual Income Tax Return is filed late, and a tax refund is due, the taxpayer will not be able to claim any interest due to them for late payment because they filed their return late.
• 3. Offset Loses: Other than household property loss the taxpayer will not be able to offset any losses incurred.
• 4. Deductions Under Section 80. If the taxpayer submits late they will not be entitled to some Section 80 allowable deductions because they submitted late.
Late Filing of Income Tax Returns – Penalties April 2018
With the Government 2018 Budget, there are new stipulations related to the late filing of Income Tax Returns. These are addressed in section 234F and cover AY 2018-19 from the 1st of April 2018. The Government has stated that Section 234F will be applied to 2017, 2018, and years onwards for all the Filing of Income Tax Returns. With this in mind, the penalties detailed below will not be applied to Income Tax Returns filed in the 2016-17 financial year-end or any relative assessments for 2017-18. What if income tax return is not filed.
For the late filing of an annual Tax Return, in relation to Section 234F, taxpayers who submit late returns have to pay a penalty of up to Rs. ten thousand (10,000) based on the dates as follows:
• For a due date of 31st July the penalty for a late income Tax Return of Rs. five thousand (5,000) is applied. This is on the condition that the Tax Return is submitted before the 31st December. Should the return be submitted after the 31st December the penalty will rise to Rs. ten thousand (10,000)
Note: Should the taxpayers’ income be up to Rs. five hundred thousand (500,000) the penalty is reduced to Rs. one thousand (1,000).
Late Filing of Income Tax Returns – Penalties 2016-017
For Income Tax Returns related to 2016 – 2017, which are accounted for under the old rules, taxpayers will be subject to a penalty of Rs. five thousand (5,000) for returns that are filed later.
This penalty is not automatically applied for a late filing of an Income Tax Return. If, or if not, the penalty is applied is all down to the individual Income Tax Officer, dealing with the case, and if that officer issues an official late notice report. All that means is that the Rs. five thousand (5,000) penalty is all down to the Income Tax Returns receiving officer.
Late Filing of Income Tax Returns – Penalties Under Section 276CC
Section 276CC of the Income Tax Act comes into play when the taxpayer has made no effort to file their Income Tax Return on time and have deliberately missed the deadline. The Income Tax late filling penalty, under Section 276CC, where the tax amount not paid is more than Rs. twenty-five thousand (25,000), is imprisonment for between six months to seven years and a fine. Other cases, related to Section 276CC, the penalty term is three months to three years in prison with a fine.
Income Tax Act Section 276CC – The Act: (what if income tax return is not filed)
“If a person willfully fails to furnish in due time [the return of fringe benefits which he is required to furnish under sub-section (1) of section 115WD or by notice given under sub-section (2) of the said section or section 115WH or] the return of income which he is required to furnish under sub-section (1) of section 139 or by notice given under [clause (i) of sub-section (1) of section 142] or section 148 [or section 153A], he shall be punishable,—
(i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;
(ii) in any other case, with imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.”
Late Filing of Income Tax Returns – Interest
In circumstances where the Income Tax Return is not filed, within the date, interest for late payment comes into play. The interest percentage is one percent (1%) per each month the return is late. Or part of the month related to when the Tax Return is submitted. One important factor, that all taxpayers need to be aware of, is related to the tax that actually has to be paid. So, if tax is due to be paid, it has to be paid at the same time as the tax return is filed. If it’s not paid, what if income tax return is not filed, it will be deemed that the tax return has not been submitted.