Taxpayers to pay penalty and risk losing tax benefits if ITR not filed by Dec 31

The deadline for ITR filing has been extended to 31 December 2020. Failure to comply will attract penalties as well as forfeiture of some tax benefits.

Taxpayers to pay penalty and risk losing tax benefits if ITR not filed by Dec 31

Coming as a much-needed relief during the COVID-19 pandemic, the deadline for Income Tax Return (ITR) filing for Financial Year 2019-20 (Assessment Year 2020-21) has been extended to 31 December 2020. The previous deadline for this was 30 November 2020. 

According to government sources, the move was implemented to provide more time to taxpayers to furnish their ITR. This is the second time that the ITR deadline is being extended in the current financial year.

Those who are required to get their ITR audited have also been given a reprieve. While the previous deadline was 31 October 2020, they now have time till 31 January 2021. Additionally, the government has extended the due date for filing annual GST returns for FY 2018-19 to 31 December 2020. 

However, despite the extended deadline, experts recommend that taxpayers pay their taxes right away, as this would help avoid any delay in tax refunds and prevent interest building up on unpaid tax.

Related: 13 Income components exempted under the new tax regime

With taxpayers hit hard by the pandemic, there’s been a huge dip in online tax filing between September and mid-October this year. The IT department revealed that the period saw only 2.19 lakh tax returns filed for FY 2019-20, compared to 6.77 crore returns filed last year.

The extension of deadline is expected to encourage taxpayers and give them the time they need to file their ITR.

Related: How is taxable income calculated?

What is the penalty for missing the deadline?

Taxpayers will have to pay a fine if they miss their ITR deadline. As per Section 234A, an interest amount of 1% will be levied for every month the filing is delayed. If the 31, 2020 December deadline is missed, a penalty of Rs 10,000 will be applicable. 

 At the same time, if the total income of the taxpayer is less than Rs 5 lakh, a maximum penalty of Rs 1000 will be levied.

Related: Form 16: Understanding Part A and Part B 

Will tax benefits suffer?

In addition to the penalty charges, failure to file ITR will also lead to the loss of some tax benefits. This means taxpayers will have to let go of certain exemptions and deductions for the year if they miss the new extended deadline. These include exemptions to new establishments under Section 10A and 10B. 

Companies dealing in infrastructure development, as well as those with profits and gains from industrial undertakings, will not be able to take advantage of deductions under 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, and 80-IE. Deductions under 80IAC, 80IBA, 80JJA, 80JJAA, 80LA, 80P, 80PA, 80QQB, and 80RRB will also not be available. Should you stick to the old tax regime or move to the new one? Read this premium piece to clear all your doubts.  




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