Filing Income Tax Returns: Take your time! Rs 10,000 late penalty is applicable from April 2018
Penalty for delay in filing income tax by individuals announced in the Budget earlier this year in February has many taxpayers worried. The new rule states that a penalty up to Rs 10,000 will be imposed on delay in filing tax return by individuals.
With a little over a fortnight left in the July 31 deadline for filing income tax returns, taxpayers are worried about paying extra over delay in taxes. They, however, can breathe easy as the new penalty system will not be in effect till April 2018 and will not affect taxes to be paid for financial year 2016-17.
The fines levied on delays in filing income tax return will depend on the time frame of the hold-up. Defaulters will have to pay Rs 5,000 if taxes are paid after the deadline but before December 31 of the assessment year. Failing to pay the taxes by December 31 will mean a penalty of Rs 10,000 against the defaulter.
However, taxpayers earning not more than Rs 5 lakhs annually will have to pay only Rs 1,000 for delay in filing income tax return.
The new provision will replace Section 271F which leaves it on the discretion of an assessing officer to levy a penalty of Rs 5,000 if an individual fails to file returns before the end of the relevant assessment year.
Section 234F remains intact though, which states simple interest is levied at the rate of 1per cent every month or part of it on any tax amount if not paid within due dates, an Economic Times report said. The section will be applicable along with the recently introduced fees.
Thus individuals failing to meet the July 31 deadline at the end of this month to file their returns will have to pay penalties as per the old rules as the new rules will be applicable from assessment year 2018-19.
Presenting the Budget this year, Finance Minister Arun Jaitley also reduced the existing rate of taxation for individual assesses with income between Rs 2.5 lakh and Rs 5 lakh to 5 per cent from 10 per cent.
A surcharge of 10 per cent of tax payable on categories of individuals whose annual taxable income is between Rs 50 lakh and Rs 1 crore will also come into effect.
In a bid to expand the tax net, government also made provisions for simple one-page form to be filed as income tax return for individuals who earn up to Rs 5 lakh apart from business income. Taxpayers filing income tax return for the first time in this category will not be subjected to any scrutiny in their first year unless the Income Tax Department receives specific information regarding his high value transactions.