Tax submitting deadline prolonged. That doesn’t imply aid from curiosity penalties

To present aid to the taxpayers amid the covid-19 pandemic, the federal government has prolonged until 30 September the deadline for submitting earnings tax returns (ITR) for FY20-21.

However, this doesn’t present aid from the penal curiosity costs which a taxpayer is meant to pay in case there’s an excellent tax legal responsibility whether or not below self-assessment tax or advance tax.

There are three sections– 234A, 234B and 234C — within the Income Tax Act 1961, below which a taxpayer is required to pay curiosity in case of delay in paying tax.

Interest below Section 234A is levied in case of delay in submitting the ITR. Suppose the deadline for submitting ITR is 31 July 2021 and an individual information ITR on 5 August, curiosity will probably be levied on the fee of 1% monthly on the tax due quantity. Part of the month will probably be thought-about a full month. Despite the very fact that there’s a delay of 5 days, curiosity will probably be charged for the complete month.

However, like final 12 months, the federal government has offered aid below Section 234A to taxpayers whose self-assessment tax is as much as ₹1 lakh. Interest will probably be levied in case the tax legal responsibility of the particular person is greater than ₹1 lakh. So, even when the deadline is prolonged until 30 September, you’ll have to pay curiosity on the fee of 1% for August and September, in case your tax legal responsibility is greater than ₹1 lakh. If the date is additional prolonged and also you delay submitting of ITR, curiosity will proceed to be levied.

Under Section 234B, one is required to pay curiosity on the fee of 1% if the taxpayer has not paid advance tax or has paid lower than 90% of the tax legal responsibility. Under Section 208, if an individual’s tax legal responsibility for the 12 months is ₹10,000 or extra, she or he is liable to pay advance tax. In case the particular person fails to take action, she or he will probably be chargeable for curiosity below Section 234B at 1% monthly or a part of the month from April until the date of cost of tax. So, even in case you are delaying submitting ITR it will likely be higher to pay advance tax as quickly as doable.

Under Section 234C, curiosity is levied in case the advance tax paid is lower than the prescribed installments. So, a taxpayer is required to pay 15%, 45%, 75% and 100% by the fifteenth of June, September, December and March month respectively. “In case there is a shortfall in advance tax payment interest at the rate 3% is charged for that particular quarter,” mentioned Hegde.

This 12 months, the tax division has launched a brand new tax submitting portal however taxpayers are going through points in submitting ITR.

“This 12 months, as taxpayers are going through issue in submitting ITR on the earnings tax portal, a aid below Section 234A ought to be offered to all assesses no matter the excellent tax legal responsibility,” mentioned Prakash Hegde, a Bengaluru- primarily based chartered accountant.

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