File your IT returns now to keep away from curiosity penalty

The revenue tax division, final week, prolonged the deadline for submitting revenue tax returns to 31 December from 30 September. However, there isn’t any aid on curiosity penalty for taxpayers who’ve an excellent tax legal responsibility above ₹1 lakh and are late in submitting their returns.

On 9 September, a notification by the Central Board of Direct Taxes (CBDT) stated “the extension of the dates … shall not apply to rationalization 1 to part 234A of the (IT) Act.”

What this implies is that if a taxpayer didn’t file her ITR on or earlier than 31 July and has excellent tax to be paid to the IT division, underneath part 234A she shall be charged a month-to-month curiosity of 1% on the excellent tax quantity. This penalty shall be levied solely on these whose excellent tax is above ₹1 lakh after eradicating advance tax or TDS that may have already been paid.

“The authentic due date was 31 July 2021. This was first prolonged to 30 September 2021 and now it has additional been prolonged to 31 December 2021. We ought to perceive that curiosity u/s 234A of I-T Act can be chargeable now, provided that excellent tax payable is greater than Rs1 lakh and it might be levied from 1 August 2021 until date of submitting of return on the price of 1% per 30 days,” defined Sujit Bangar, founder, Taxbuddy.com.

The curiosity charged is straightforward curiosity and won’t compound every month. To give an instance, in case your excellent tax legal responsibility is ₹1.3 lakh, you’ll have to pay ₹1,300 each month until the date you file your ITR. Since the curiosity is calculated on a month-to-month foundation and kicks in firstly of every month previous the unique due date, when you file your ITR even on the primary day of any month, you’ll nonetheless need to pay the total curiosity quantity for that month.

Hence, it’s suggested that you just pay your pending tax, if any, on the earliest. “It’s advisable to compute tax instantly even when ITR could also be filed later. This might assist us in saving curiosity. After paying the excellent tax, which is finished by way of internet banking, one can file ITR anytime earlier than 31 December,” stated Bangar.

This transfer doesn’t affect small taxpayers who’re more likely to have tax legal responsibility underneath ₹1 lakh.

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