If your annual income is more than Rs 2,50,000 or you have received any income during the last financial year (2017-18), on which taxes were deducted at source (TDS), it is mandatory for you to file income tax return (ITR). Usually the due date of filing ITR for individuals / HUF / organisations, where audit is not needed, is July 31 and where audit is needed, the due date is September 30 of the assessment year. This year, the due dates were extended from July 31 to August 31, 2018 for normal assessees and from September 30 to October 15, 2018, for assessees needing audit.
If you have, however, missed the extended due date, you may still file the ITR till December 31 by paying a late fee up to Rs 5,000, which would be doubled to Rs 10,000 if you file it even late till March 31, 2019. However, if your total income does not exceed Rs 5 lakh, a late fee of Rs 1,000 will be charged. The late fees were introduced by Finance Minister Arun Jaitley in the 2017 Union Budget to make people sincere about filing returns and to ensure that assesses file their ITRs on time.
If you are among the people for whom filing ITR is mandatory, but just want to avoid ITR to escape from paying late fees, you should know the consequences of your casual approach.
In case you have failed to pay either wholly or partly self assessment tax or interest or fee, then you will be treated as assessee in default in respect of unpaid amount. In such a case, you shall be held liable to pay penalty of such amount as the Assessing Officer may impose and in the case of a continuing default, such further amount or amounts as the assessing officer may, from time to time, direct. However, the total amount of penalty cannot exceed the amount of tax in arrears.
You may also be treated as an assessee in default, when a demand notice under section 156 has been issued to you for payment of tax, but failed to pay the amount within a period of 30 days of the service of the notice at the place and to the person mentioned in the notice.
On being declared an assessee in default, you will be liable to pay penalty of such an amount as the Assessing Officer may impose. However, the penalty cannot exceed the amount of tax in arrears.
You will also be held liable for penalty, if you under report or misreport your income. The rate of penalty shall be 50 per cent of the tax payable on under-reported income and 200 per cent for mis-reported income.
You may have to pay penalty up to Rs 25,000, if you fail to maintain books of account as per the provisions of Section 44AA of Income Tax Act.
Similarly, there are several provisions for imposition of penalties and even imprisonment from 6 months to 7 years, along with penalty, if you fail to reveal your income and pay taxes.