It is essential to file your income tax returns by the due date to avoid penalties and other consequence. Here, we tell you what the last date to file ITR and also why you should file ITR on time is
Many taxpayers believe that if they have paid their taxes, their responsibility is over. However, taxpayers must file their taxes by a due date, (last date to file ITR), failing to do which would invoke legal consequences.
What is the last date to file ITR?
July 31, 2020, is the last date to file taxes for Assessment Year (AY) 2020-21 for assessees whose account books do not need to be audited. In the last couple of years, the government has extended this deadline. For the financial year 2018-19, the deadline was extended to August 31.
It is imperative to file your taxes by the ITR last date. Not filing your ITR on time can lead to penalties are other consequences.
It is important to note that you need to file returns irrespective of your income. Even if your income is below the taxable income, it is recommended that you file ITR, though it is not compulsory. If your taxable income is below the limit after factoring in deductions, filing IT returns is mandatory.
The importance of the ITR receipt
ITR receipts have more details about your taxes than Form 16. It contains details of your total income and also information about your income from other sources.
Now that we have answered the question- what is the last date to file ITR, we will look at why you should file ITR on time.
Penalty for late filing under section 234F:
The Government has brought about some penalties so that people file their returns on time. Section 234F of the Income Tax Act came into effect from April 1 2017. If you file your returns post the deadline, you are liable to pay a maximum penalty of Rs 10,000.
This is how it works. If you file your taxes after July 31, but before December, there is a penalty of Rs 5,000. If the returns are filed by December, the penalty goes up to Rs 10,000. However, if you are a small taxpayer and your total gross income does not exceed Rs 5 lakh, you have to pay a fine of Rs 1,000.
Payment of interest:
If one does not file ITR on or before the due date, one also has to pay interest apart for the penalty. This is at the rate of 1 per cent every month or part of a month on the amount of tax unpaid as per section 234A. This interest rate is payable until you file your IT returns. Remember that you cannot submit your returns without paying your taxes.
The disadvantages of not filing your ITR returns by the due date :
You don’t have time to rectify errors
Filing your ITR on time is also essential for other reasons. If you make a mistake in ITR filing, you only have time till the end of the relevant assessment year to make the change. There used to be a 2-year window earlier, which has been reduced now. If you are filing late, even a fundamental error can land you into trouble.
Carrying forward losses not allowed
You are allowed to carry forward capital gains losses to coming years. In this way, you can set off current losses with future gains. Carrying forward losses would reduce your tax outgoing in the future. However, if you do not file your ITR by the due date, this method is not allowed.
Delay in refund
If you think you’re eligible for a refund, it is vital to file your return by the last date. If your ITR filing is delayed, your refund will also get delayed. Also, you will not get any interest on it.
There are also other reasons why you should file your ITR on time. If you are applying for a high-value loan like a car loan or a home loan, the bank will ask for your for IT returns of the last 3 years. If you have not paid your ITR by the due date, then getting a loan may be a hassle. Income Tax Returns are also essential to apply for Visas of some countries like United States, United Kingdom, Canada and Australia. This is to prove your tax compliance. The idea is to assess your income and make sure that you can pay for expenses on your trip.