If the government does not extend the deadline to file your income tax returns (ITR), you have less than one week left to do it. If you fail to file the ITR by 31 July 2018 for the financial year 2017-18, you should know the following:
Tax exemption limits for financial year 2017-2018
|Age of the resident||Total income exempt from tax|
|Below 60 years||Up to Rs 2.5 lakh|
|60 to 80 years||Up to Rs 3 lakh|
|80 years and above||Up to Rs 5 lakh|
Who are not liable to pay penalty on late ITR filing?
For individuals with gross total income not exceeding the basic limit, there will not be any penalty charged on them for late filing of income tax returns under section 234F of the IT Act.
Section 139(1) of the IT Act states that mandatory income tax filing is for:
- Company/firm/LLP irrespective of their income
- Individuals whose total income exceeds the basic exemption limit
The total income shall be your earnings before considering deduction under section 80C to 80U and incomes specified under section 10(38).
Who will have to pay the penalty?
Apart from individuals whose total income exceeds the exemption limit, there are some on whom the penalty will be applicable despite their income being below threshold. An ordinary resident holding foreign assets that generates income or is a beneficiary or has signing authority on an asset outside India has to mandatorily file tax returns in India.
Failure to do so will make them liable for the penalty on late filing. So, if you have earned any dividend from shares in a company listed abroad, you have to file the ITR even if your income is below the tax slab limit.
How much penalty are you liable to pay?
- If you file the tax returns of 2017-18 on or before 31 December 2018 and after 31 July 2018, you are liable to pay Rs 5,000.
- If you file it after 31 December 2018 but before 31 March 2019 (end of the assessment year), you are liable to pay Rs 10,000.
- Small taxpayers with income not exceeding Rs 5 lakh will be liable to pay Rs 1,000.
The late filing fee was introduced in the Union Budget 2017 and being implemented from the current assessment year (2018-19) onwards.
Why should you still file your ITR before due date?
Your income may not exceed the exempt limit but it is best to file it before the due date. The reasons being:
- If you have a tax refund to claim, the interest on this balance will be computed from 1 April of the assessment year to the date on which the refund will be paid to you. If you miss the due date, interest will be calculated from the date of filing taxes till you receive the refund. Note that the refund is paid on a first-come-first-serve basis.
- One cannot carry forward losses made if the ITR was not filed within due date.