Income Tax for Individual
An Income Tax Return is mandatorily required to be filed if the Total Income is more than the minimum amount which is exempted from the levy of tax. In other words, it is compulsory to file an Income Tax Return in case tax is payable on your income.
Although ITR is not required to be filed when there is no tax payable, you may still receive a notice for non filing of ITR even if you were not required to file your ITR. This article focuses on such cases wherein you may receive a notice for non-filing of ITR.
Compliance : Income Tax Return filing
This notice is sent to people by the Income Tax Dept if they think that the person has some taxable income but the ITR has not been filed for such income. The Income Tax Dept collects information through various sources and then based on their own analysis send notices to people who have carried out specified transactions.
If you have received this notice you should not panic. However, you should also not ignore this notice.
You are only required to reply to the govt the reason why you didn’t file your ITR.
Penality for NON Compliance of ITR
Individuals with income exceeding more than the basic exemption limit are required to file Income Tax Return within the due date and if the person fails or misses the due date then there are the certain provisions of penalty under the Income Tax Act, 1961. The assessing officer may contact the individual through a notice to furnish reasons for not filing the return within due date.
Not filing the return within due date may lead to levy of penalty upto INR 10,000.
It was a well-known fact that the last date to file your ITR for the Financial Year 2019-20 was 31 July 2020 extended to 30 Nov 20 due to COVID-19. And Not filing your ITR on time can prompt a penalty, but there are additional consequences and inconveniences with the delay and penalties, and today we are exploring the same here:
- Penalty for Late Filing u/s 234F
- Reduced Time for Revising Your Return
- Payment of Interest
- Carry Forward of Losses is Not allowed
- Delay in Receiving Refunds
Penalty for Late Filing Income Tax Return u/s 234F
As per the modified rules notified under section 234F of the Income Tax Act that is already in action from 1 April 2017, filing your ITR after the due date, can make you liable to pay a maximum penalty of ₹ 10,000.
Let’s understand it more clearly if you file ITR after 30 Nov but before December of this year (2020), you will be liable to pay a penalty of ₹ 5,000. If ITR filed after December 2020 then the penalty farthest will be expanded to ₹ 10,000.
There is also a great relief for small taxpayers that the IT department has stated that if the total income is not more than ₹ 5 lakh then the maximum penalty for delay will only be ₹ 1000.
| Late Income Tax Filing Fee Details | ||
| E- Filing Date | Total income upto ₹ 5,00,000 | Total income ₹ 5,00,000 & above |
| 30 Nov 2020 | ₹ 0 | ₹ 0 |
| From 1st Dec 2020 to 31st Dec 2020 | ₹ 1,000 | ₹ 5,000 |
| From 1st Jan 2021 to 31st March 2021 | ₹ 1,000 | ₹ 10,000 |
Common mistakes during filing ITR:
- Do not claim fake deductions in ITR in order to reduce income tax liability.
- If the income is more than the basic exemption limit, filing of return is mandatory.
- Mention your accumulated income earned from all the employers, if you have changed the job.
- When you select the wrong ITR form, you may get income tax department notice mentioning under-reporting income as indifferent form you will miss some information to file.
- A taxpayer is also required to make sure that data feed into ITR is in accordance with the Form 26AS. In any discrepancy, the department can ask for an explanation.
- It is required to either e-verify the ITR form or sent it to CPC, Bengaluru for verification. if the assessee fails to e verify his return then the return will be considered as an invalid form.
- It is required to mention every single detail regarding the income in the ITR.
As per the Income Tax Act, below are entities or firms that require mandatory filing of ITRs in India:
- People whose gross total income (before allowing any deductions under section 80C to 80U) exceeds Rs 2.5 lakh in FY 2018-19. This limit is Rs 3 lakh for senior citizens (aged above 60 but less than 80) and Rs 5 lakh for super senior citizens (aged above 80).
- Companies or firms irrespective of whether you have income or loss during the financial year.
- Those who want to claim an income tax refund.
- Those who want to carry forward a loss under a head of income.
- Resident individuals who have an asset or financial interest in an entity located outside of India. This is however not applicable to NRIs or RNORs (Resident but not Ordinary Resident).
- Residents and signing authorities in a foreign account. Again, this is not applicable to NRIs or RNORs.
- Those who derive income from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
- Foreign companies taking treaty benefit on a transaction in India.
- Even NRIs, who have income that exceeds Rs. 2.5 lakh (for FY 2019-20) which is earned or accrued in India, are required to file an income tax return in India.