The last date for filing Income Tax Return (ITR) for the financial year 2020-21 or Assessment Year (AY) 2021-22 was extended multiple times during the year owing to problems faced by assessees with Income Tax Department’s new e-filing portal. However, it has been confirmed that no more extensions would be given and therefore all taxpayers need to complete their ITR filings by December 31, 2021.

Even with just one day left to the deadline, several taxpayers continue to file their returns. Over 5 crore ITRs have been filed till Wednesday, December 29, 2021. Those cutting it too close to the deadline might be at risk, say experts. Waiting till the last date for filing ITR for AY 22 can impact your financial health.

It is to be noted that the deadline for companies that have to get their accounts audited, has been extended till February 15, 2022. December 31, 2021 deadline applies to individual taxpayers who do not have to get their accounts audited.

It is also important to note the difference between the ‘last date’ of ITR filing for a particular assessment year and the ‘due date’. ‘Due date’ refers to the date by which return for a particular AY can be filed without paying the late fee but ‘last date’ is the day after which the taxpayer needs to pay a late fee.

Delay TDS refund

The most obvious impact of filing ITR late will be a delay in refunds for TDS. Refunds are processed on priority for those who complete their return filing process sooner. It is to be noted that I-T Department pays income tax to taxpayers in case there is a delay in generating TDS refunds. However, no such interest is given to those who miss the deadline to file ITR. So, being punctual in filing ITR will ensure in timely refunds to the taxpayer and also interest in case there is a delay from I-T Department. It is therefore advisable not to wait until the deadline and finish the process at the earliest.

Late filing increases changes of mistakes

Hurry burry makes a curry, goes the old adage. The same holds true for crucial financial matters such as the return filing process. Waiting till the last minute to file the ITR can make you susceptible to errors. A mistake in filing the ITR can put you at risk of queries or investigation from the I.T. Department. The best practice is to keep all your I.T. related details ready, review the details minutely and file the returns well before the last date to file the ITR without penalty. Correct filing of ITR will help you get the TDS refund (if any) on time, and you won’t have to file a corrected or revised ITR later on, says Adhil Shetty| CEO of BankBazaar.

Tax planning for next year: Filing ITR early on can help you focus on tax planning for the current financial year for which you will need to file ITR next year.

What if you miss the December 31 ITR filing deadline?

Taxpayers that fail to file the ITR for the current assessment year before the December 31 deadline will need to file a belated return, which is filed after the due date. This late filing will also be accompanied by a late filing penalty which the taxpayer needs to pay to the I-T Department. The penalty was introduced from AY-19 onwards. This late fee can be as high as Rs 5,000. In case, the total income of the taxpayer is less than Rs 5 lakh per annum then Rs 1000 late fee is levied.

It is also to be noted that a penal interest will also be charged on unpaid tax liability if any.

No carry forward of losses

Taxpayers are not allowed to carry forward losses, except on house property, in case of delayed or belated filing. Losses accrued on account of business and profession, such as intra-day trading and derivative trading, short term or long term losses on income from other sources, will not be allowed to carry forward in case of belated filing. However, these losses are allowed to be carried forward in case ITR if filed before the deadline.

Source: https://www.timesnownews.com/business-economy/companies/article/itr-filing-deadline-for-ay22-things-that-could-go-wrong-in-late-belated-filing-of-income-tax-return/844927