All you need to know about ITR due dates

If the Lord loveth a cheerful giver, how he must hate the taxpayer (return filers)! The Income Tax Department is following John Andrew Holme quietly by reminding all the income-tax payers to file their ‘Returns’ on or before the due date via e-mails and SMS.

Let us have a look at various due dates around filing Income Tax Returns (ITR) and the consequences for filing or not filing even thereafter.

Return of Income & due dates

The Income Tax law mandates every taxpayer to communicate the details of his income or loss to the Income Tax Department by filing an applicable ‘Return of Income’ on or before the due date, in the prescribed form and duly verified. The question is who has to file a return? It includes all: individuals, HUFs, partnerships, LLPs, companies – private and public, associations of persons, bodies of individuals, artificial juridical persons, cooperative societies, local authorities, charitable and religious trusts, business trusts, universities, political parties, etc.

The due date for filing of return for a class of taxpayers who are not mandated to audit under the income tax law is July 31, while it is October 31, for those cases that are mandated to audit under the Income Tax Law or any other law.

Benefits of filing ITR within due date

Filing one’s ITR on or before the due date will ensure a number of benefits to the taxpayer.

a) Specified deductions: Taxpayers who file their return before the due dates are eligible to avail of 15 types of deductions provided under Chapter VI-A Section 80IA to 80RRB, to name a few, profits earned by certain industrial undertakings, eligible startups, profits from housing projects, generation of employment for new employees, payment of royalty among others.

b) Availability of loans: Some of the documents such as PAN, Aadhar, driving licence, bank statements and Income Tax Return acknowledgement serve as income proof while applying for a loan. While sanctioning loans, banks and financial institutions will give greater weightage to returns filed on or before the due date than belatedly filed returns.

c) Quicker VISA process: Most embassies require individual assessees to prove their income earning capacity and seek at least two immediate previous assessment years’ tax returns. Being a tax-compliant citizen will ensure a speedy VISA process.

Consequences of not filing ITR within due dates

Not filing one’s ITR on or before the due date will attract severe consequences.

a) No carry forward of losses: On failure to file ITR before the due date, a taxpayer will not be allowed to carry forward their losses including those from business, speculation, specified businesses, capital gains and other sources.

b) Interest: The taxpayer shall be liable for payment of interest under Section 234A at 1% per month or part thereof for delay caused in the filing of the ITR.

c) Reduced interest on tax refunds: Those ITRs with refunds due filed after the due date will fetch lesser interest compared to those returns filed within the due date. In the former case, interest will be computed from the date of filing of return and not from April 1 of the relevant assessment year as in the case of a compliant ITR.

d) Late Fee: They shall be liable for payment of late filing fees under Section 234F of Rs 1,000 or Rs 5,000, as the case may be, for the delay in filing ITRs.

e) Prosecution: If a taxpayer willfully fails to furnish an ITR on or before the due date, they shall be punishable under Section 276CC with imprisonment of three months to seven years and a fine.

How to avoid the consequences for non-compliance

In any case, if a taxpayer misses the upcoming due date for this year (July 31), they can still avoid severe consequences to some extent by filing ITR latest by December 31, 2022, assuming no such extension has been considered. Since it will be filed after the due date but three months before the end of the relevant assessment year (AY) – in our case, AY 2022-23, it will be regarded as a belated return.

However, there are certain benefits which are available to a taxpayer only if they file the ITR on or before the specified due date. In addition to losing those benefits, the belated return should accompany the applicable late fee and interest. However, resident senior citizens who are turned 75 years or more need not worry about these consequences, because they are specifically exempted from the requirement of filing returns subject to certain but minimal conditions.

Concluding remarks

Before parting, it is very pertinent to know what the courts of the law say about the returns and due dates. The Supreme Court in Sasi Enterprises v ACIT (2014) 361 ITR 163 (SC) clearly held that filing the return within the stipulated period is a duty cast on those who have to declare their income. Later, by relying on the above, the Madras High Court in Dharampal R Pandia v Dy CIT (2021) 435 ITR 301 (Mad) held that the burden lies on the taxpayer to show that he had no wilful intention to not file the return, should file it within the stipulated timeline and cannot blame his ex-employer by stating that all taxes have been duly paid and assume that ex-employer would have filed the return.

Last week, the Supreme Court in PCIT v Wipro Ltd (2022) 140 taxmann.com 223 (SC) held that a taxpayer must fulfil the twin conditions to carry forward or claim set-off of any losses benefit, including the furnishing of a declaration before the assessing officer and doing so before the due date of filing the return.

Given severe consequences for non-compliance and strict interpretation of tax statutes by courts, it is high time to sit and file the returns well before the due date. Due to the adoption of advanced technologies in the Department, filing one’s ITR is becoming easier. However, it is advisable to avail a tax professional’s advice on critical aspects such as capital gains, stocks, shares, investment-related claims and disclosure of foreign assets to avoid future unforeseen consequences.

(The writer is the founder and chief executive officer of Shree Tax Chambers)