What if you fail to file your ITR by 31 December, 2021

The due date for filing of the Income Tax Return (ITR) for the financial year 2020-2021 i.e. assessment year 2021-2022 for general category of all taxpayers, whose account are not required to be audited and which covers all salaried is usually 31st July every year but has been extended till 31st December 2021 as of now. What happens if an individual taxpayer whose accounts are not required to be audited misses the deadline and fails to file his ITR by 31st December, 2021 for the assessment year 2021-2022? Let us discuss.

People are generally under the impression that the due date is also the last date beyond which you can not submit your ITR, which is not correct. There are two dates relevant for ITR filing: one is the due date and the other is last date. In case you fail to submit your ITR  by the due date, you can still file it by the last date. The due date for submitting ITR for each year, for all the taxpayer whose accounts are not required to be audited, is 31st July of the year following the year for which the ITR is to be filed and the last date as per the amended law is 31st December of the following year. The due dates and last date for filing of the ITR for such tax payers have been extended to 31st December, 2021 and 31st March 2022 respectively for the financial year 2020-21. 

What happens if you miss the deadline?

In case you fail to submit your current ITR by extended due date i.e. 31st December 2021, you can still do so by 31st March 2022 but you lose your right to carry forward any losses for the current year and which cannot be set off against current year’s income. So in case you have losses, under the head business income or capital gains or loss beyond two lakhs rupees under the house property head, during the current year and which you are otherwise entitled to carry forward for set off in subsequent years, will not be able to do so if you miss the 31st December 2021 deadline. 

In case the taxes paid by you or on your behalf are more than your tax liability and therefore are entitled to get refund for the excess taxes paid, you lose your right to get interest on such excess tax paid for the period of delay which is attributed to you. In case the taxes paid by you or on your behalf are lower than your aggregate tax liability, in addition to the interest for such shortfall, you will also have to pay interest for the period of delay in submitting your ITR even if you have already paid the shortfall after 31st March 2021.

Payment of late for filing of your ITR after the due date

In addition to the above consequences, you will have to mandatorily pay a flat late fee of five thousand rupees at the time of filing of your ITR if the ITR is submitted after the due date, in case your taxable income is more than five lakhs. The late fee, however, is restricted to Rs. 1,000/- in case the taxable income is below Rs. five lakhs.

So in case you are required to submit your ITR for any reason even when no tax is payable by you, you will have to pay a late fee of one thousand rupees. This can happen when your gross total income exceeds threshold of  basic exemption limit applicable to you but does not exceed five lakhs and no tax is payable due to rebate available under Section 87A. This may also happen when you have to file an ITR due to owning of any assets outside India or  you being a signatory to any account outside India or for  having spent on electricity or foreign travel beyond specified threshold limit.

What happens if you fail to submit your ITR even by the last date?

In case you fail to file your ITR by the extended due date i.e. 31st March 2022 the income tax department can levy a minimum penalty equal upto 50% of the tax which would have been avoided by you by not filing the ITR , in addition to the income tax and interest liability till the date you file your ITR in response to the notices from tax department.

Only a few people know that the government has powers to launch prosecution against you and put you behind bars if you do not file your ITR by the due date. The present income tax laws prescribe a minimum sentence of three years of imprisonment and a maximum of seven years. It is not that the department can launch prosecution against you in each and every instance of failure to file the ITR. The income department can launch prosecution only in case the amount of tax sought to be avoided exceeds Rs. 10,000/-.

I am sure after reading this article you have made up your mind to file your ITR before 31st December 2021.