Till the assessment year 2017-18, one could have been relaxed and laidback about filing Income Tax returns provided there was no tax outstanding and there was no loss either to be carried forward because except in these two situations there was no harm done to him if he took time even up to 31 March, i.e. the last day of the assessment year to file his return. The penalty of Rs 5,000 was payable only if the returns weren’t filed even as late as on the last day of the assessment year.
In the event of the last date for filing returns -- 31 July, of the assessment year need not been taken seriously except by those who had tax outstandings or losses to carry forward. For the laxity of not filing returns even while there was tax outstanding, interest of one percent per month was payable on the tax outstanding in addition to the penalty of Rs 5,000 and for the laxity of not filing return of loss on time, the penalty was even more severe---bar on carrying forward the loss.
Things have changed tremendously from the assessment year 2018-19 onwards insofar as the penalty regime for late filing of return is concerned. For returns filed after the due date of returns (31 July for individuals and others except for companies as well as those for whom tax audit is compulsory), the predetermined penalty is Rs 5,000 till 31 December and Rs 10,000 if the delay is beyond 31 December. The filing was done during 1 January and 31 March of the assessment year.
The penalty regime indeed is peremptory and non-discretionary so much so that if you file your return on 1 August 2018 for the previous year 2017-18, it will not be accepted unless you have deposited Rs 5,000 penalty even for a day’s delay. It is possible the Central Board of Direct Taxation (CBDT) might extend the due date by a few days but don’t count on it if you want to play safe and avoid the penalty of Rs 5,000.
There is, therefore, likely to be tremendous pressure on the ITR server in the coming few days so as to beat the 31 July deadline breach of which invites a penalty of Rs 5,000.
In fairness to the department, it cannot be blamed for the last-minute rush because the online returns for the assessment year 2018-19 could have been filed much earlier. In fact, the forms were put in place as early as in the first week of May 2018. Therefore, if the taxpayers were too laidback, they have only to blame themselves.
But then the failure in filing returns at the earliest opportunity may be due to a mismatch between TDS (tax deducted at source) records of the assessee and the Income Tax Department’s AS26 statement. The department itself urges assessees to make sure that the credit they claim for TDS tallies with what appears in the website, i.e. statement AS26.
Now the problem is often there is a mismatch for which the assessee is not to be blamed but others involved in the chain. For one thing, the bank with which the TDS is deposited by the deductor is sometimes lax in uploading the information into the website. For another, due to omission and commission credit may be given to a wrong person. Indeed, when there is a mismatch, it takes considerable time to sort out the issue as the assessee first contacts the payer who in turn contacts his bank with which he had deposited the TDS neither of which lose sleep over such matters as they get numerous such queries in the humdrum of their business.
What the assessee in such a situation can do is to file the return despite the mismatch, hoping that by the time the assessing officer takes up the return for consideration the official AS26 has caught up and has been updated so as to accord with the TDS amount claimed by the assessee. In any case, he should go ahead and file his return on 31 July even if by then the mismatch issue hasn’t been sorted out because while the penalty of Rs 5,000 is peremptory, the denial of credit for TDS not appearing in AS26 is not. The assessee can always file for rectification of the mistake after he takes steps successfully to ensure that AS26 is brought up-to-date to accord with his own claim of TDS.
(The writer is a senior columnist and tweets @smurlidharan)
Updated Date: Jul 20, 2018 08:13 AM