ITR filing deadline ends today, here is actual cost of missing it

Today is the last day for individuals to file their Income Tax Returns (ITRs) for the financial year 2022-23 (Assessment Year 2023-24). With the deadline ending in less than 24 hours, the number of filings have soared to over 6 crore, surpassing last year's figures by a significant margin. However, individuals who miss the July 31 deadline are not entirely out of luck. They can still file their ITRs after the due date, but such filings will be termed "belated ITRs" and come with financial repercussions, say experts.

The last date for filing belated ITRs for the FY 2022-23 (AY 2023-24) is December 31, 2023. But late filers will have to pay a penalty under Section 234F of the Income Tax Act, 1961. "The penalty varies depending on the taxpayer's income bracket. Small taxpayers with a taxable income not exceeding Rs 5 lakh will face a penalty of Rs 1,000. In contrast, those with a total income exceeding Rs 5 lakh will be charged a penalty of up to Rs 5,000," said Amit Gupta, MD, SAG Infotech.

Penal consequences of delay

The consequences of missing the ITR filing deadline go beyond just penalties. "Individuals who have tax dues will also incur penal interest under Sections 234A, B, or C, as applicable, which amounts to 1 per cent per month or part thereof for late filing of ITR. Additionally, an additional 1 per cent interest is charged on the default in payment of advance tax until the date of filing the belated ITR," Gupta added.

For those expecting an income tax refund, it will only be paid if the ITR is filed and verified. However, no interest will be paid on the refund for belated ITRs.

July 31 is deadline for ITR filing | Image credit: Pexels

Forfeiture of advantages

Furthermore, missing the deadline will result in the forfeiture of certain advantages. Late filers will lose the ability to carry forward certain losses, such as those from the sale of mutual funds or equity shares. If the ITR is filed on time, these losses can be carried forward for up to 8 years to set off against future capital gains, reducing the taxable income and the associated income tax liability.

"The consequences can become more severe if an individual continues to delay or fails to file their ITR altogether. The assessing officer may make a best judgement assessment and levy a penalty of 50 per cent of the tax payable in case of under-reporting of income or 200 per cent of the tax payable in case of misreporting of income," said Arpit Suri, CA and personal finance expert.

Jail and fine fot not filing ITR

In extreme cases, failure to file an ITR could lead to prosecution under Section 276CC of the Income Tax Act, resulting in imprisonment ranging from 3 months to 7 years, along with a fine.

"As the deadline for tax filing ends today, taxpayers are urged to file their ITRs on time to avoid the penalties and other potential consequences. Those who have not yet filed their returns are advised to do so promptly and make use of the additional time until December 31, 2023, to avoid more substantial financial implications," Suri added.