How Much Will You Pay In Penalty For Missing ITR Deadline Or Tax Payment?

The last date for filing income tax returns for the financial year 2022-23 is July 31, 2023. Any delay in filing ITR will attract a penalty. Learn more.
How Much Will You Pay In Penalty For Missing ITR Deadline Or Tax Payment?

The last date to file an income tax return (ITR) is July 31, 2023, for the financial year 2022-23 or the assessment year 2023-24). Missing the ITR deadline will attract a penalty, including interest on any amount due in tax. Let us explore this in detail.

Penalty Under Section 234F:

A person who fails to file ITR by the due date, July 31, 2023, for FY2022-23 will have to pay a penalty of Rs 5,000. The penalty amount will be Rs 1,000 if the taxpayer's total income is not more than Rs 5 lakh.

According to the Income Tax Act, "If assessee who is required to furnish return of income under section 139 failed to furnish return of income within due date as prescribed under section 139(1), then as per section 234F, he will be required to pay (a) fee of Rs. 5,000 if (the) return has been furnished after the due date prescribed under section 139(1). However, it shall be Rs. 1,000 if the total income of an assessee does not exceed Rs. 5 lakh."

However, the penalty also includes interest on the tax amount paid late.  

Interest Under Section 234A:

Section 234A of the Income Tax Act prescribes the rules for the interest charged on delayed return filing. If the taxpayer with a tax liability does not file ITR by the due date, then the individual will also be liable to pay interest on the tax amount due.  

As per the Income Tax Act, "Under section 234A, interest is levied for delay in filing the return of income, filing of an updated return or filing of a return in response to the notice issued under section 142(1)."

The interest calculation is done as per provisions of Rule 119A in the Income Tax Act, where any fraction of the month is rounded off to the whole month for interest calculation, whether for the entire year or a few months. The 'amount of tax, penalty or other sums' is also rounded off to the nearest multiple hundred rupees to calculate interest as per the rules.

Under Section 234A, the interest is levied at 1 per cent per month or part of the month, which again is considered a whole month. It is a simple interest. In the case of regular assessment, interest is calculated based on the tax amount reduced by the advance tax, tax deducted at source (TDS), tax collected at source (TCS), and reliefs claimed under sections such as 89, 90, 90A, and 91, and tax credit claimed under section 115JAA and 115JD, as per the Income tax rules.

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