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Belated Income Tax Return: Failed to file ITR for AY 2019-20 by due date? You can still do it; Here is how

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Late Filing of Income Tax Return 2019: The due date to file income tax return (ITR) for Financial Year 2018-19 (Assessment Year 2019-20) was extended from 31 July 2019 to 31 August 2019. Over 5.65 crore returns were filed by taxpayers on or before the due date with approximately 50 lakh returns filed on 31 August 2019 itself. However, if you have missed the extended deadline as well to file your ITR, don't worry. You can still file your income tax return. However, there are certain points you need to consider before you avail of this last chance.

We are mentioning below the key pointers which you should be aware of:

Belated Return: Tax return filed after the filing deadline is called a “belated return”. Belated return for FY 2018-19 can only be filed on or before 31 March 2020.

Implications of filing a belated return

# Late filing fee (in nature of penalty): Due to change in law with effect from FY 2017-18, penalty provisions have been inserted.

We have tabulated below the late filing fee provisions for filing of return after the due date applicable for FY 2018-19:

# Interest under Section 234A of the Income Tax Act 1961 (Act): In addition to penalty provisions covered above, taxpayers will also be liable to pay interest at simple interest rate of 1 per cent per month or part of the month till the date of filing of return. However, when there is no tax liability, taxpayers will not be liable to pay this interest solely due to the belated filing of return.

# Additional interest under section 234B of the I-T Act: If the taxpayer has not paid advance tax during the FY 2018-19 or discharged less than 90 per cent of liability by advance tax, additional interest at 1 per cent per month or part of the month will be levied till the date the entire tax liability has been paid.

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# Cannot carry forward losses: If you file a belated return or do not file a tax return for a particular year, you cannot carry forward certain losses for set-off in subsequent years (e.g. capital losses).

Implications of not filing return

If a belated tax return is not filed with the above-mentioned deadline of 31/3/2020, the taxpayer will lose out on any refund claim in respect of excess taxes paid and consequential interest that he would have been entitled to from the Revenue authorities.

# Additional implications under the Act if return is not filed: In addition to interest and penalty provisions covered above, tax authorities may impose additional penalty of 50% of tax payable (as under-reported income) as applicable. In case of serious willful attempt to evade taxes, rigorous imprisonment may be considered by the tax authorities which may extend to 7 years.

# Black Money Act: Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Act) if an individual being a resident and ordinary resident (ROR) who has foreign assets and does not file the ITR, there is a penalty prescribed of Rs 10 lakh. The only exception to this is if the foreign asset is only a bank account, with aggregate amount of less than Rs 5 lakh at all times during the year. In addition, he shall be punishable with rigorous imprisonment for a term from 6 months to 7 years and with fine.

# Other implications: Apart from the above, tax return may also be required for documentary evidence for any application for visas for travelling to overseas countries or as part of application documents for loans etc.

As can be seen from above, there are several implications of not filing of income tax return / delayed filing of return. Hence, to avoid any further interest and penalty implications, diligently assess your tax position and furnish the ITR at the earliest along with the late filing fee, as applicable.

(By Alok Agrawal, Partner, Deloitte India, and Charmy Parekh, Deputy Manager with Deloitte Haskins and Sells LLP)