Taxes are a grave matter anywhere you go. Not just in India but all over the planet. We have seen firms being brought down by tax evasion-related penalties. In some countries like the US, getting imprisoned for tax evasion is common. Actor Wesley Snipes was jailed for three years in 2008 with a fine of $5M for failing to file over $15 million worth of taxes.- an Income Tax Return
According to pocketoption, India’s tax filing deadlines for the assessment year 2020-2021 ended was 31st December 2021. Then there was an additional span of up to 15th February for late filing, which was further extended to 31st March 2022 due to the Covid 19 pandemic.
In a nutshell- an Income Tax Return
- Indians had between 1st Jan 2022 and 31st March 2022 for late tax filing, but at a cost.
- The tax department can serve you with a show-cause letter in case you fail to file for your ITR, and may even prosecute you.
Deepak Jain, chief executive, TaxManager.in, says, “If an assessee misses this deadline, he/she may receive a show-cause notice for undisclosed income. He/she will also have to pay a fine.”
Filing taxes after the due date but before the end of the assessment year attracts a ₹5,000 penalty. If you do so during the grace period up to 31st March of the assessment year, the tax department will charge you a late fee of ₹10,000. This only applies to ITR of income brackets below ₹5 lakh. The charges may vary according to the nature of the offense, but you must pay a fine before submitting your late returns.
“Penalty is mandatory now. If you have missed the deadline, the tax returns can’t be filed unless you pay the penalty. This came into effect last year,” said Prakash Hegde, a Bengaluru-based chartered accountant.
Section 234A provides that simple interest is levied for delayed tax returns of income at a rate of 1% monthly.
There is an exceptional group that doesn’t need to get penalized for late tax reporting or even non-filing. Individuals and organizations within the tax exemption limit have nothing to worry about. The Union budget committee however announced in 2019 that the non-taxable group must file for ITR if they meet any of these conditions, despite not having any taxable income;
- Spent more than Rs.1 lakh on electricity consumption within the assessment year.
- Made a total deposit of Rs.1 crore in one or different bank accounts within the year.
- Posted foreign travel expenses exceeding Rs.2 lakhs
- Indian residents with income from foreign assets, including residual income
The ITR may charge you for failing to file your taxes and may end up in jail for three months to two years depending on the tax owed. There is also a possibility of spending up to seven years in jail if you’re found to have a more serious offense.
“As per the law, prosecution proceeds can be initiated. However, if the return is filed before the end of the assessment year, the prosecution is not initiated.
Prosecution is an extreme step taken only if someone doesn’t file in the required assessment year and the amount involved is huge, or if the individual has undeclared money. Sometimes it is initiated if the income tax officer has issued a notice and the taxpayer has not responded or filed the returns. It happens in exceptional cases,” said Hegde.
Late tax filing will also mean you can’t carry forward certain losses to the next financial period, and you may as well lose tax refunds for the applicable assessment year.