Benefits of Filling Income Tax Return (ITR) on time

Under Income Tax Act, various person are required to file their income tax return within prescribed time limit i.e. due date.  If the assessee failed to file income tax return before the due date then he shall be liable for the followings :-

    1. Penalty under Section 234F
      Penalty under section 234F is levied from Financial year 2017-18 of amount up to Rs. 10,000 if return is not filed before the due date. This is a mandatory penalty and can not be waived off by the income tax officer.
    2. Interest u/s 234A
      If you have some outstanding taxes payable to the Income Tax Department, then the interest (simple interest) is chargeable @1% per month on the tax outstanding (net of advance tax & TDS, if any) from the due date till the actual return filling dates.

Outstanding taxes= Rs 2,00,000 (after advance tax and TDS)
Due date of filling return =31st July
Actual date of filling return = 12th Dec

Interest = 2,00,000 X 1% X 5 = Rs 10,000
Calculation is done on monthly basis. As the return is filled in December so interest is chargeable from August to December.

    1. Interest u/s 234B
      This interest is chargeable if the tax liability for the financial year is Rs 10,000 or more and the advance tax deposited by the assessee till 31st March is less than 90% of tax liability.
      The interest (simple interest) is chargeable @1% per month on the shortfall in the tax amount required to be deposited by the assessee before 31st March.

Tax Liability = Rs 30,000
Amount already deposited before 31st March = Rs 10,000
Date of deposit of remaining Rs 20,000 = 8th June

Shortfall = 90% of 30,000 – 10,000 = Rs 17,000
Interest = 17,000 X 1% X 3 = Rs 510
Calculation is done on monthly basis. As the shortfall is paid in June so interest is chargeable from April to June.

Also Read:

Documents required to file ITR

  1. Penalty after assessment year
    If the income tax return is not filled before the due date, then a belated return can be filled any time before the expiry of 1 year from the end of the relevant assessment year.  However the Assessing Officer may impose a penalty of Rs 5,000 for late filling of return u/s 271F.
  2. No carry forward of losses
    If the return of income is not filled before the due date, the losses shall not be allowed to carry forward arising under various heads except from loss under House Property and unabsorbed depreciation.
  3. No right to revise return
    An assessee can revise his return in case of error but this right is not available in the case the return is filled after the due date.
  4. Loss of interest on TDS refund
    If you have any TDS refund, then the assessee is entitled to receive simple interest @0.5% per month or part of a month from 1st April to the actual date when the refund is granted.  However if the reason for delay in refund is attributable to the assessee then no interest shall be payable for that period. If the assessee file income tax return after the due date then the interest may not be payable for that time period till the assessee files his income tax return.
  5. Allowing of expenditure on which TDS is required to be deducted as per section 40a(ia)
    A person is required to deduct TDS on certain specified payments at a specified rates if the payment exceeds specified threshold limit. In case of non-deduction of tax or failure to deposit of tax after deduction, then such assess is to be consider assessee in default and such expenditure is not allowed to be deducted from the Income Tax Return of payer. However if the recipient discharged his tax liability and filled return before the due date then the payee is not considered as assessee in default.

Other Related Articles:

Person for whom it is mandatory to file Income Tax Return (ITR)

Due date of filling Income Tax Return (ITR)

[Photo credit: Lending Memo]

Prateek Agarwal

Prateek Agarwal

I am Practicing Chartered Accountant from Jaipur and in practice for more than 9 years. I writes mainly for GST and Finance.

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