Income tax late fee and interest on delay in filing ITR

The Ministry of Finance announced the extension of the last date of filing Income Tax Return (ITR) for financial year 2019-20 from 31^st July 2020 to 30^th November 2020. If the taxpayer do not file the income tax return before 30^th November 2020 then he/she will be liable to pay Income Tax late fee and Interest on delay in filing ITR.

Income Tax Late Fee for late filing ITR u/s 234F

If the taxpayer do not file the income tax return before 30^th November 2020 then he/she will be liable to pay Income Tax late fee of:

• ₹5000, if income tax return is filed after the due date but on or before the December 31 of the relevant assessment year.
• ₹10000 if income tax return is filed after 31^st December but before the end of the relevant assessment year i.e., before 31^st

If the total income of person does not exceed ₹500000 then the fee payable by that person shall not exceed ₹1000.

If the Gross Total Income is below the exemption limit, liable to income tax then no late fee is charged.

Interest for late filing of Return u/s 234A:

• Interest for late filing shall be 1% per month or part of the month.
• Interest is calculated on the amount of tax due, i.e. tax assessed on the total income less
• Advance tax
• TDS
• TCS
• Period of interest shall be calculated from the due date of filing return of income up to the date of furnishing of return of income.

Example: Ram is running a medical store. The due date of filing the return of income in his case is 30^th November 2020. He filed his return of income on 2^nd February 2021. Tax liability of Ram for the year is ₹28400 (which is paid in 2^nd February). Advance tax paid by him is ₹15000 and he has TDS credit of ₹5000.

In this case Ram is liable to pay interest as he filed return after the due date i.e., 30^th November under section 234A.

The time for delay is 2 months and 2 days. According to the provision, the 2 days will be counted as a complete month hence the period of interest will be 3 months.

In this case the amount of interest will be calculated on Income tax due less advance tax and TDS. Therefore the amount of interest will be calculated on ₹8400 (i.e. 28400-15000-5000).

Interest liability will be ₹252 (i.e. ₹8400* 1%* 3)

Carry forward of losses:

• Loss under profit or gain from business or profession (PGBP) and capital loss can be carried forward only if return of loss (because of zero net income return of income becomes return of loss) is filled within the due date.
• Loss under house property and unabsorbed depreciation can be carried forward even if return not filled up to the due date.