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November 29, 2020

Last date to file Income Tax Returns for FY 2018-19 is 30th November 2020. Know repercussions of not filing

by facelesscompliance in Income Tax

Last date to file Income Tax Returns for FY 2018-19 is 30th November 2020. Know repercussions of not filing

The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. The lockdown though necessary has led to a disastrous impact on the economy. With an ever-increasing corona virus cases, lockdown was considered as an only solution to flatten the curve. However, the measures which were implemented to avoid a human disaster, have in turn led to the birth of several issues such as unemployment, recession, hindrance to economic growth, financial instability and so on.

The Government of India announced a variety of measures to tackle the situation, from food security and extra funds for healthcare and for the states, to sector related incentives and tax deadline extensions. With the ongoing COVID -19 pandemic a lot of income tax due dates were extended. The Income Tax Return Filing Date was extended. The Aadhaar-PAN Linking Deadline was also extended by the Income Tax Department.

Why is it important to file the ITR?

An income tax return is basically a document that is filed as per the provisions of the Income Tax Act, reporting one’s income, profits and losses and other deductions as well as details about tax refund or tax liability. It is always considered a prudent action to file one’s income tax return on time. More than any other benefit, being on the right side of law helps. It is recommended to keep the income tax department informed about one’s income and taxability. This communication is only possible when one files their ITR. Filing your ITR also will provide you with a number of benefits such as:

  • Claiming Deductions
  • Set off and Carry forward of losses
  • To claim Refunds
  • Claiming Relief under Sections 90, 90A and 91
  • Easy loans approvals
  • Serves as an Income Proof
  • Serves as an Address Proof
  • Aids in VISA processing, buying a high insurance policy, filing Government Tender, Credit Card Processing etc

The Income Tax Law provides for mandatory filing of returns in certain cases.

Who is required to mandatorily file Income Tax Returns (ITR)?

  • Individuals or HUF who is less than 60 years of age and has gross total income more than Rs 2.5 lakh i.e. above basic exemption limit has to file income tax returns, according to the Income Tax Act.  For senior citizens, the basic exemption limit is Rs 3 lakh, and for those who are more than 80 years old, the basic exemption limit is Rs 5 lakh.
  • Companies have to compulsorily file income tax returns irrespective of profit or loss.
  • A firm, individual or a HUF whose books of account are required to be audited under section 44AB.
  • A resident assessee having any assets (including financial interest in any entity) located outside India or signing authority in any account located outside India.
  • Taxpayers claiming relief under section 90, 90A or 91.
  • Assessee wanting to apply for refund.
  • Assessee wanting to carry forward or set off their losses.
  • Those who derive income from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
  • If one has entered into any transaction under the Annual Information Return.

Extension of due dates of ITR for FY 2018-19 AY 20219-20

The CBDT on 30th September, 2020 extended the due date of for furnishing of belated and revised returns for the Assessment Year 2019-20 under sub-section (4) and (5) of section 139 of the Act respectively, from 30th September,2020 to 30th November, 2020. It is important to remember that 30th November is the last date for filing the revised and belated returns for FY 18-19 and not the original return.

Belated tax returns are when you file your tax returns after the extended returns filing deadline under Section 139(4) of the IT Act. A revised income tax return, as the name suggests, is refiling of an ITR by an assessee if he or she finds any mistake, omission or any wrong statement made in the original tax return. A revised return can be filed as per Section 139(5) of the Income Tax Act, 1961. For instance, if you forgot to declare the interest that you earned from a bank account or have failed to claim a deduction for the premium you paid for a health insurance policy, you can file a revised return to declare the interest income or claim the deduction.

What will be the repercussions if you do not file your ITR on time?

1) Interest on Tax Liability

  • If you don’t file your ITR, the belated return could lead to extra interest on monthly basis for the remaining tax payable by you.
  • You would then be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A. Also, ITR cannot be filed if one hasn’t paid the taxes.
  • The calculation of penalty will start from the date immediately after the due date

2) Penalty

  • As per the modified rules notified under section 234F of the Income Tax Act that is already in action from 1 April 2017, filing your ITR after the due date can make you liable to pay a maximum penalty of Rs 10,000.
  • If the total income is not more than Rs 5 lakh then the maximum penalty for delay will only be Rs 1000.

3) Prosecution

  • Assessee may also have to face prosecution also (i.e. rigorous imprisonment for a term up to 7 years and fine), in extreme and high-value cases.
  • This may happen in case the wilful default to furnish ITR and tax payable (after reducing taxes paid and TDS) exceeds Rs 10,000.

In case of companies not filing ITR, the principal officers of the firms including directors, will be punishable with rigorous imprisonment and a fine, irrespective of whether any tax is payable by the company

Best judgment assessment (Assessment under section 144)

The Assessing Officer is under an obligation to make an assessment to the best of his judgment in the following cases:

  • If the taxpayer fails to file the return required within the due date prescribed under section 139(1) or a belated return under section 139(4) or a revised return under section 139(5).
  • If the taxpayer fails to comply with all the terms of a notice issued under section 142(1) or fails to comply with the direction issued under section 142(2A)
  • If the taxpayer fails to comply with all the terms of a notice issued under section 143(2)

Thus, Non-Filing of the Income Tax Return may result in the Best Judgement Assessment. This is an assessment carried out as per the best judgment of the Assessing Officer on the basis of all relevant material he has gathered.

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