What happens if you don’t file your ITR by December 31, 2021?

The deadline for filing the Income Tax Return (ITR) for the financial year 2020-2021, i.e. assessment year 2021-2022, for the general category of all taxpayers whose accounts are not required to be audited and which covers all salaried is usually 31st July each year, but it has now been extended until 31st December 2021. What happens if an individual taxpayer whose accounts aren’t subject to audit misses the deadline and fails to file his ITR for the assessment year 2021-2022 by December 31, 2021? Let’s talk about it.

Is the due date also the ITR’s last date of filing?

The common misconception is that the due date is also the deadline after which you cannot file your ITR, which is incorrect. There are two dates that are important for ITR filing: the due date and the last date. If you miss the deadline, you still have until the end of the year to file your ITR. For those taxpayers whose accounts are not required to be audited, the due date for filing ITR for each year is 31st July of the year after the year for which the ITR is to be filed, and the last date, as per the modified law, is 31st December of the following year. For the fiscal year 2020-21, the due dates and deadlines for filing ITRs for such taxpayers have been extended to December 31, 2021, and March 31, 2022, respectively.

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What if you don’t meet the deadline?

If you miss the extended due date of December 31, 2021, you can still submit your current ITR by March 31, 2022, but you will lose your right to carry over any losses from the current year that cannot be offset against current year’s revenue. So, if you have losses under the headings of business income, capital gains, or losses exceeding two lakhs rupees under the house property heading during the current year that you would otherwise be able to carry forward for set off in subsequent years, you won’t be able to do so if you miss the deadline of December 31, 2021.

If the taxes paid by you or on your behalf exceed your tax liability and you are entitled to a refund, you forfeit your claim to interest on the excess taxes paid for the period of delay that is attributable to you. If the taxes paid by you or on your behalf are less than your total tax liability, you will be required to pay interest for the time of delay in filing your ITR, even if you have already paid the deficit after March 31, 2021.

Late payment for filing your ITR after the deadline

In addition to the aforementioned repercussions, if you file your ITR beyond the due date and your taxable income exceeds five lakhs, you will be required to pay a flat late charge of five thousand rupees at the time of filing. If the taxable income is less than Rs. five lakhs, the late fee is limited to Rs. 1,000/-.

So, if you’re compelled to file your ITR for any reason, even though you don’t owe any taxes, you’ll have to pay a one-thousand-rupee late fee. This can happen if your gross total income exceeds the basic exemption ceiling but does not exceed five lakhs, and no tax is required due to the refund provided under Section 87A. This can also happen if you need to file an ITR because you own assets outside of India, are a signatory to an account outside of India, or have spent more than the prescribed threshold limit on energy or overseas travel.

What happens if you miss the deadline for submitting your ITR?

If you fail to file your ITR by the extended due date, which is March 31, 2022, Income tax department can levy a minimum penalty of up to 50% of the tax that you could have avoided by not filing the ITR, in addition to your income tax and interest liability until the date you file your ITR in response to the tax department’s notices.

Only a few individuals are aware that if you do not file your ITR by the deadline, the government has the authority to prosecute you and imprison you. The current income tax laws stipulate a three-year minimum term and a seven-year maximum punishment. The government does not have the authority to prosecute you for every incident of failing to file an ITR. Only if the amount of tax sought to be avoided exceeds Rs. 10,000/- can the income department bring a case.