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How To Avail Benefit of I-T Return Extension

Author: Balwant Jain/Wednesday, August 12, 2020/Categories: Exclusive

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How To Avail Benefit of I-T Return Extension

The government has agreed for one more and probably the last extension on July 29, 2020, to taxpayers to file their Income-Tax Return (ITR) for financial year ended March 31, 2019. A layman must be wondering as to what are the implications for him of the news of extension of dates. Let me attempt to make it simple for you to understand.

Background

Due to Covid-19 pandemic a nation vide lock down was imposed from March 22, 2020. This resulted into complete standstill and stoppage of all activities. Since our financial year ends on March 31 every year, this date has huge significance to the taxpayers. There are many things which you are required to complete by March 31 of every year. Since March 31 fell during the lock down period, general public was not able to complete these tasks, the government announced extension from time to time.

The tax laws allow you to file your ITR for one year only at any given point of time. So, for the financial year ended March 31, 2019, though the due date for filing of ITR was July 31, 2019, for majority of tax payers, the law allows you to file it by end of the next financial year i.e. March 31, 2020.

Likewise for claiming various deductions you are required to make the payment of invest money by March 31 of the same year. Such deductions include various items under Section 80C for life insurance premium, contribution towards Public Provident Fund (PPF), tuition fee. Likewise for claiming deduction under Section 80 D for medical insurance premium and for deduction in respect of National Pension System (NPS) the payment has to be made by end of the year.

In order to help those who could not do the above things, the government first extended the dates till June 31, 2020, on March 31, 2020. These dates were further extended till July 31, 2020, on June 24, 2020, for both the purposes i.e. for filing of ITR for the year ended March 31, 2019, and for making payments for claiming various deductions. Since the offices of professionals who help their clients are not functional especially in metro cities like Mumbai, the government has again extended the dates for filing of the belated ITR for 2019 till September 39, 2020. Please note the government has not extended the dates for making the payment/investments to claim the deduction beyond July 31, 2020.

What should you do now?

After four lockdowns the Central Government has started lifting the restrictions and has started the process of unlock. After two unlocks, Unlock 3.0 has come into operation meaning thereby more and more activities are beginning. The restriction will now be removed gradually and will be removed fully in due course. For those of you who have not yet filed their ITR for the year ended March 31, 2020, you should not wait any further. In my opinion this is the last extension of due dates for filing of your ITR because government is in no mood to give you unlimited extensions. It becomes evident from the fact that the government has not extended the dates for making payment to claim these deductions.

So, those who have not yet filed your ITR for year ended March 31, 2019, will have to incur some additional costs, while filing the ITR. Firstly you will have to pay a late fee of Rs10,000 for filing the ITR now belatedly. However, the amount of late fee is restricted to only one thousand rupees in case your total income, after all the deductions, is not more than five lakhs. Moreover, in case full tax in respect of the income was not paid before March 31, 2019, either way of advance tax or in the form of TDS, you will have to pay interest at the rate of one per cent on the shortfall for each month or part of the month beyond the due date i.e. July 31, 2019.

Moreover, you will also have to pay interest of one per cent on such shortfall from April 1,  2019, till you pay the balance tax. Please note that no penal interest is payable in case the shortfall is less than 10 per cent of the gross tax liability. Please note that you are required to pay the late filing fee as well as the interest for delay in filing of ITR as well as for delay in payment of taxes.

What if you fail to file your ITR by the extended date?

Since the last date has already been extended thrice from March 31, 2020, the final date i.e. September 30, 2020, seems to be the ‘now or never date’ for filing of pending ITR. So if you have taxable income and adequate taxes have not been paid either by way of tax deduction at source or through advance tax/self assessment tax, the income tax department can levy a minimum penalty of 50 per cent of the tax, which remains unpaid for your failure to file the ITR. In addition to the penalty you will have to pay interest for the period of delay.

The Income-Tax Department can also initiate prosecution proceedings against you for non-filing of your ITR, if the tax amount involved exceeds Rs10,000. The quantum of punishment may vary between three months and seven years. So, please do not wait for any further extension lest you miss this deadline.

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