However, the penalty is not levied on all taxpayers who miss the ITR filing deadline. The income tax laws specify the amount of penalty that will be levied and who has to mandatorily pay the late filing fee (penalty) and who doesn’t have to pay the fee even if tax return is filed after the deadline.
Also Read: Last date to file ITR for different taxpayers
Penalty amount payable
Section 234F of the Income-tax Act, 1961, levies a penalty on the taxpayer if his/her ITR is filed after the deadline. An income tax return filed after the last date is called belated ITR.
A penalty of Rs 5,000 is levied at the time of filing of belated ITR. However, for small taxpayers whose taxable income does not exceed Rs 5 lakh, the penalty amount would not exceed Rs 1,000.
Remember the penalty would be levied even if there is no tax payable at the time of filing ITR. A belated ITR can be submitted and verified only after challan details related to payment of late filing fee is mentioned in the ITR form.
Also Required: 10 documents required for income tax return filing
These taxpayers must mandatorily pay penalty
As per the income tax laws, there are three categories of taxpayers who have to pay late filing fee/penalty if they miss the ITR filing deadline.1. Income exceeds basic exemption limit: If the taxpayer’s taxable income exceeds the basic exemption limit, then penalty will be levied if belated ITR is filed. The basic exemption limit applicable to a taxpayer depends on the tax regime chosen by him or her.
The new tax regime is the default tax regime. Currently, under the new tax regime, income up to Rs 3 lakh is exempted from tax. This basic exemption limit is applicable to all taxpayers who continue with the new tax regime irrespective of their age.
On the other hand, the basic exemption limit under old tax regime depends on the age of an individual. Currently, under the old tax regime the basic exemption limit for taxpayers below 60 years of age is Rs 2.5 lakh. For senior citizens aged 60 years and above but below 80 years, income up to Rs 3 lakh is exempted from tax. For super senior citizens (those above the age of 80 years), the basic exemption limit is Rs 5 lakh.
2. Satisfying conditions under Section 139(1) of the Income-tax Act: There can be taxpayers whose taxable income does not exceed the basic exemption limit. However, these taxpayers may meet/satisfy one or more of the conditions mentioned in the Seventh provision of Section 139(1) of the Income-tax Act. As per this section, if a taxpayer meets any of the specified conditions, he/she has to mandatorily file ITR even if taxable income is below basic exemption limit. Therefore, as per the income tax laws, penalty will be levied on belated ITR filing by any of these taxpayers.
According to income tax laws, taxpayers who satisfy conditions for mandatory ITR filing as per Seventh proviso of Section 139(1) of the Income Tax Act are as follows:
a) Spent Rs 2 lakh or more (either in single transaction or on aggregate basis) for himself or any other person for travel to a foreign country.
b) Paid Rs 1 lakh or more (either in a single transaction or on aggregate basis) as electricity bill during the financial year
c) Deposited Rs 1 crore or more in one or more current accounts either in a single transaction or on aggregate basis.
d) Any other prescribed conditions
3. Holding foreign assets: Resident individuals investing in foreign assets such as equity shares of foreign companies or earning rental income from house abroad are mandatorily required to file ITR even if taxable income is below the basic exemption limit.
ITR filing is mandatory if a resident individual is holding foreign assets as a beneficial owner or if resident individual is a beneficiary or has signing authority for any account held outside India. If the ITR is filed after the due date, then late filing fees would be applicable.
These taxpayers do not have to pay penalty
There can be individuals who have to file ITR, say to claim income tax refund. However, their taxable income does not exceed the basic exemption limit. As per the income tax laws, no penalty is applicable to taxpayers filing ITR after the due date if the taxable income does not exceed the basic exemption limit.
Taxable income not exceeding basic exemption limit refers to gross taxable income before taking any eligible deductions are taken into account.
Earlier the penalty was higher
Till FY 2019-20 (AY 2020-21), the penalty for missing the ITR filing deadline was up to Rs 10,000. There was a two-tier structure for penalty. If the belated ITR was filed on or before December 31, then penalty of Rs 5,000 was applicable. However, if belated ITR was filed between January 1 and March 3, then penalty of Rs 10,000 was applicable.
However, in FY 2020-21 (AY 2021-22), the penalty for missing ITR filing deadline was reduced by Rs 5,000 to Rs 10,000. The reduction in penalty happened because the government reduced the time to file belated ITR by three months. The government reduced the time limit from March 31 earlier to December 31.
Currently, the last date to file belated ITR is December 31, 2024, for FY 2023-24 (AY 2024-25).