Income Tax Returns is to be filed within such time period as prescribed by Income Tax Department. If you don't file such return within prescribed period, it will attract interest of Section 234A.

 

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Now, You could be in one of these 3 distinct positions for not filing the income tax returns before the due dates.

 

1.     You have outstanding taxes to be paid to the Income Tax department

2.     You have a tax refund from the Income Tax department

3.     All the taxes have been paid with no refund expected or taxes payable.

 

If point 2 or 3 above applies, then interest will not be applicable in these two scenarios so do not worry about late filing of your tax returns. But in case you have not paid taxes, which are outstanding, and you have not filed your income tax returns by the due date, you are in for trouble.

  

Types of Assessee


Due Date

 

An Individual or HUF or businesses not required to get audited

31st July 2018

An Individual whose accounts are required to be audited

30th September 2018

A Company

30th September 2018

A partner of a Firm whose accounts are required to be audited

30th September 2018

An assessee who is required to furnish a report under section 92 E for international transaction

30th November 2018

Any other person

31st July 2018

 

Rate of Interest

 

Under section 234A, If you are liable to file Income tax return but does not file ITR till due date than, you will be liable to pay simple interest of 1% or part of month of outstanding tax. This interest will calculated from the due date applicable to you for return filing till the date you actually file your income tax return.


How is interest u/s 234A calculated?


Let’s understand with an Illustration: 


Ilustration-1

 

Mr. Diwan has a total tax liability of Rs 2,00,000 (net of advance tax paid & TDS if any) in Financial Year (FY) 2016-17 and he files his return on the 17th January, 2018 instead of 31st July, 2017 of the Assessment Year 2017-18, when he was actually supposed to file his return as on individual. He is 6 months late in his tax payments. (The 17-day period in January is treated as a month).

 

Interest = 200,000 x 1% x 6 = Rs. 12,000

 

Now, This Rs. 12,000 is the interest amount, over and above the tax amount that Mr. Diwan will be paying in any case.

 

Illustration-2

 

Ms. Sonali has a total tax outstanding amounting to Rs  80,000 (including the net of the advance tax paid and TDS, if any) in FY 2015-16. She files his tax return on 15th December 2016 instead of 31st July 2016 of the assessment year. Since She missed the actual date to file a return, She is late by 5 months in paying tax.

 

The penalty is calculated as: Interest = 80,000 x 1% x 5 = Rs. 4,000

 

Ms. Sonali will be paying Rs 4,000 extra, over & above the tax amount, if She fails to file her tax return, She will be required to pay 1% simple interest until March 31 2017, which is the end of the assessment year. As seen in the illustration above, Ms. Sonali liability would be s Rs 6,400 i.e. (Rs.80,000 x 1% x 8 months).