What is Penalty for Not filing Tax returns by 31 December 2021? What Notices you may receive?
Filing of income tax return is an annual task for all taxpayers. This year due to Covid virus pandemic and new income tax portal made by Infosys the forms and the utilities where released by the income tax department only in July 2021, however the portal was not functioning and there where multiple errors in bugs, because of which the deadlines to file income tax returns where extended up to 31 December 2021 for the taxpayers who do not require audit.
As on 28th December 2021, almost five crores tax returns have already been filed and another two crore tax returns are pending to be filed. Those taxpayers who have not filed their tax returns till date has a last chance to file the tax returns before 31 December 2021
Penalty is charged for Delay in Filing Tax returns under Section 271F as per Income Tax. Penalties are as follows
Till last year, if a taxpayer missed the ITR filing deadline, the maximum penalty he/she would have had to pay was Rs 10, 000. For FY 2020-21, AY 2021-22 a person filing belated ITR will have to pay a penalty of up to Rs 5,000. There is a relief given to small taxpayers — the IT department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000 only
There are other following benefits you miss out if you fail to file income tax return by 31st December 2021 following are few of them
1) Payment of interest
If a taxpayer fails to file is income tax return by 31 December 2021 then he would be liable to pay interest on any unpaid tax under section 230 4A of the income tax act so the longer you wait the more you have to pay interest
2) Carry forward of losses won’t be allowed
If during the current financial year you have incurred any business loss or you have incurred any loss the capital gains like trading in shares or securities are you have incurred loss in your house property like paying your interest on loan the said amount of loss will not able to be carried forward to the next year if you don’t file your returns by 31st December 2021. So in all the cases where you need to carry forward the losses to the subsequent year you need to file income tax return on time before the due date
3) Delay in Receiving the refund
If any refund is due to you it will be delayed to process the refund, because unless you file the returns you cannot claim refund. Further you earn interest on refund only only when you file return and verify them. So it is good practice to file returns on time to earn interest on refund
Notice for Not filing Tax Returns
If you have been filing income tax returns and irrespective of genuine reasons fail to file the income tax department can issue notice to you u/s 143(2) of Income Tax Act, stating non-compliance as the reason of notice.
- Return Under Preparation.
- Business has been closed.
- No Taxable Income.