Missing ITR filing deadline on Dec 31 will attract penalty twice that of last year

 One important difference between missing the ITR filing deadline last year and missing it - December 31 - this year is that you will have to pay a penalty of Rs 10,000 this time, unlike last year when the penalty for belated ITR filing within a few months of missing the deadline was only Rs 5000. However, this penalty or late filing fee will only be applicable if your net total income (i.e. income after claiming eligible deductions and tax exemptions) exceeds Rs 5 lakh in the financial year for which the ITR is being filed. If your net total income does not exceed Rs 5 lakh in the financial year, then late filing fee will be Rs 1,000.

The normal deadline to file Income Tax Returns (ITRs) for an individual is July 31 every year. If you miss the deadline and file a belated return by December 31 of the same year, then the late filing fee is Rs 5000. If you file, the belated return after December 31 but before March 31 of the relevant assessment year then the late filing fee is Rs 10,000. As the time period between July to December 31 would already be over once the new deadline of December 31 is missed therefore the higher penalty of Rs 10,000 would automatically become applicable.

Chartered Accountant Naveen Wadhwa, DGM, Taxmann.com says, "As the due date (for ITR filing) has been extended to December 31, 2020, the late filing fees of Rs. 5,000 shall not be applicable because it is charged if return is furnished after the due date but before December 31 of the relevant assessment year. Thus, an ITR filed between January 2021 and March 2021 will be termed as belated ITR for FY 2019-20 and will attract a late fee of Rs 10,000, if applicable."

Corroborating the view, Abhishek Soni, CEO & founder, Tax2win.in, an ITR filing website says, "This is because no change has been made in section 234F of the Income-tax Act. Under this section, there is a two-tier structure of levying late filing fee on belated ITR filing."

A late filing fee under section 234F is usually levied as follows:
a) Rs 5,000 if the ITR is filed after the expiry of the deadline but on or before the December 31
b) Rs 10,000 if the ITR is filed between January 1 and March 31.
However, for small taxpayers whose total income does not exceed Rs 5 lakh, then late filing fee of Rs 1000 is levied.

Even individual taxpayers whose income is above the exemption limit but have already paid their entire tax due will have to pay the penalty as applicable if they file a belated ITR i.e. after the December 31 deadline.

Levying of late filing fee on belated ITR was announced in Union Budget 2017 and became effective for the income tax returns filed for FY 2017-18 onwards.

What if income is below exemption limit
Effective from FY 2019-20, ITR filing is also mandatory if you meet certain conditions, even if your gross total income is below the basic exemption limit i.e. there is no tax liability. These conditions are:
a) If you have spent Rs 2 lakh or more on foreign travel on self or any other person in the relevant financial year;
b) If you have paid an electricity bill of Rs 1 lakh or more in the relevant FY; and
c) If you have deposited Rs 1 crore or more in one or more current accounts maintained with a bank or co-operative bank.

In such cases, if ITR is not filed before the expiry of deadline i.e. December 31, 2020, then late filing fee will be levied on filing a belated ITR. However, the fee amount will not exceed Rs 1,000 in such cases. On the other hand, if ITR filing is not mandatory under the income tax laws, then no penalty will be levied even if the ITR is filed after the due date.