The deadline to file income tax return (ITR) for this financial year (FY 2018-19) was extended from July 31 to August 31.
Now, if for some reason you still do not manage to file your ITR before the end of the day, here is what will happen. Further, here are your options in case you want to file your ITR post the deadline:
The penalty or Fee
Until assessment year (AY) 2017-18 there was no penalty or fee for filing belated income tax returns. However, this penalty/fee is applicable from AY 2018-19. A new, section 234F, was inserted by the government into the Income Tax Act. As per this section, an individual would have to pay a fee of up to Rs 10,000 for filing income tax return after the due dates specified in section 139(1) of the Act.
As per the amendments made in the Finance Act 2017, taxpayers are liable to pay a fee of Rs 5,000, if their tax return for the financial year 2018-19 is filed after the return filing deadline (i.e., August 31, 2019) but before December 31, 2019.The fee payable will increase to Rs 10,000, if the tax return is filed on or after January 1, 2020.However, if the total income of the taxpayer is less than Rs 5,00,000, the fee amount shall not exceed Rs 1,000.
However, it is important to note that if you have any unpaid tax liability, then a penal interest on the same would be levied, as applicable to your case, if you have filed a belated return.
But if no tax is payable, the taxpayer won’t be liable to pay this interest solely due to the belated filing of ITR for FY17-18.
If the income tax department on assessing your return raises demand for additional tax payment, then you would have to pay penal interest on that tax as well as the additional tax. Therefore, it is advisable to file your return on time.
How to file a belated return?
The process of filing a belated return is the same as filing the return on or before the due date. The main difference would be that while filling the applicable ITR form, you would have to select “Return filed under section 139(4)” in the drop-down menu in the relevant box in the form. Also, remember that if you are filing a belated return for FY18-19, then you need to fill the applicable ITRs as notified for FY18-19 only and not for any previous or later FY.
Can you revise belated ITR?
Yes, you can. An ITR filed after the due date is called a belated return. It can be filed before the end of the relevant assessment year, i.e., before March 31, 2020 in this case. From FY16-17, i.e., AY17-18 onward, you are even permitted to revise a belated return.
However, if you file your return after the deadline, you will lose out on certain benefits and a penalty will be levied.
What if I have filed my returns but there is an error?
If after filing your tax return you realise that you have not reported certain incomes, or some deductions were not availed of in the return computation, it is possible to file a revised return.
How much time do I get to verify my return?
Merely filing your tax return is just half of the process – you need to verify it as well. As per the present tax laws, you can verify your return within 120 days of filing it.
Can I carry forward losses if I file belated return?
As per the Indian income tax laws, losses under any head of income (other than income from house property), can be carried forward only if the tax return is filed within the due date, i.e., July 31 (August 31 for AY 19-20). However, taxpayers can carry forward the loss under the head income from house property, even if the tax return is filed after the due date.
Key announcements made by the FM in the press conference
In an unprecedented move, the Finance Minister has held a press conference on Friday, August 23, 2019 to announce certain measures Govt. will be taking to give a boost to the securities market and economy. Some of the key measures that have been announced includes the relief to the FPI from the enhanced surcharge, de-criminalization of CSR violations, and immunity to eligible start-ups and investors from angel tax. The Finance Minister has also announced that two more sets of new announcements shall come up in upcoming days. The key announcement made by the Finance Minister are as under:
1) Enhanced surcharge on FPIs has been withdrawn in respect of capital gains
After a clamor by the FPI on the increased surcharge, the Finance Minister has announced the withdrawal of provision to levy surcharge on the tax payable by the FPI and Domestic investors on short-term capital gains and long-term capital gains from sale of equity shares, equity oriented funds and units of business trust. However, it appears that the foreign and domestic investors shall continue to be liable to pay the increased surcharge in respect of other income, i.e., interest, dividend, etc. In other words, the enhance surcharge on domestic investors and FPIs have been rolled back and pre-budget position has been restored. The decision to revoke surcharge on domestic and foreign investors will be applicable from the current financial year.
2) No angel tax on recognized start-up
Finance Minister has announced that the provisions of Section 56(2)(viib) shall not be applicable to the recognized start-ups and the investors. Inspite of various directions issued by the CBDT, start-ups were facing difficulties from getting relief from the revenue officers and they have been continuously pleading to the Dept. to provide relief from angel tax in respect of all pending proceedings as well. It is not clear whether exemption from angel tax has been provided prospectively or retrospectively, which shall be clear when the Govt. issues the ordinance.
3) New dedicated division to address the problem of start-up
It has been decided to set-up a dedicated cell under the member of CBDT for addressing the problems of Start-ups. A start-up having issues related to Income-tax can approach the cell for quick resolution of the problem.
4) Dispose of notices
With effect from 01-10-2019, all the Income-tax notices issued to the taxpayer shall be disposed of within three months from the date of reply by the taxpayer. All the old notices shall be decided by 01-10-2019.
5) Additional depreciation on vehicles purchased till March 2020.
It has been decided to allow additional depreciation of 15%, taking it to 30%, on all vehicles purchased till 31-03-2020.
6) GST refunds shall be processed within 60 days
To address the concern raised by the exporters and MSMEs in respect of delayed payment of refund, the Finance Minister has announced that all pending GST refunds due to MSMEs shall be paid within a span of 30 days. Further, going forward all GST refunds payable to MSMEs shall be paid within 60 days of intimation.
7) FM assures to remove the compliance difficulties
The Finance Minister has given assurance that Government shall take further measures to make GST compliance easier. The Finance Minister has announced to meet GSTN officials in order to remove glitches in GST filing process and make it taxpayers friendly.
8) Aadhaar based KYC for NBFCs
The NBFCs shall be permitted to use Aadhaar authenticated bank KYC to avoid repeated procedure. The norms for KYC has proposed to be changed by enabling the use of Aadhaar number for KYC, with the consent of the Aadhaar Number holder. This will also enable banks for easier onboarding of customers by opening instant bank accounts using e-KYC based on Aadhaar authentication through the OTP mode. Simplified Aadhaar based KYC also been proposed for opening Demat account.
9) CSR violations to be treated as civil matter
The provisions of the CSR as provided under section 135 (7) of the companies Act, 2013 provides for penal provisions whereby a fine ranging from Rs. 50,000 to Rs. 25,00,000 can be imposed on company on failure to comply with CSR requirement. Further, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 3 years or fine ranging from Rs. 50,000 to Rs. 5,00,000. The new CSR provisions are already in force w.e.f., 2-11-2018.
The Finance Minister in its press conference has clearly said that there is no intention of the Govt. to go on prosecution route for CSR violations and thus, the CSR violations shall be treated as civil matter. This assurance from the FM would give much relief to the business in complying with the CSR requirement without fear of criminal prosecution and harassment.
10) Co- origination of loans by PSBs jointly with NBFCs:
The FM has said that in order to take advantage of liquidity with PSBs and last mile customer connect of NBFCs, PSBs to fast track collaboration for loans to MSMEs, small traders, Self-help groups and MFI clients borrowers in co-ordination with MSMEs.
