Income Tax Return: Interest Charged For Late Filing After July 31

The last date to file Income Tax Return (ITR) for the financial year 2019-20 is December 31, 2020. The deadline for ITR filing had been extended from July 31 to December 31 by the Central Board of Direct Taxes (CBDT) due to the COVID-19 pandemic.

However, even though the deadline has been extended, individuals will still be charged an interest for delay in filing their return as well as a late-filing fee. Under sections 234A and 234B of the Income tax Act, individuals will be charged a monthly interest from their deadline to the date of filing. However, penal interest will only be applicable to those with outstanding tax.

Individuals will also be charged a late-filing fee under section 234F of the Income Tax Act. If the income tax returns are filed after the due date but before December 31, a fee of Rs 5,000 will be charged. If the returns are filed after December 31, a fee of Rs 10,000 will be charged. However, the fee will not exceed Rs 1,000 if the individual's total income is less than Rs 5 lakh.

Interest on Income Tax Return

Under section 234A, a simple interest at 1% per month will be levied for delay in filing income tax returns.

For example, Ms. Rekha is liable to pay Rs 10,000 for FY 2019-20. Her due date for filing ITR was July 31, 2020 but she filed her ITR on December 5, 2020, a delay of four months and five days.

Under section 234A, even part of a month is considered a full month while calculating interest on delay. In her case, Ms Rekha will have to pay an interest for five months. Therefore, she is liable to pay Rs 500 as interest.

Interest on advance tax

Individuals whose tax liability is more than Rs 10,000 after deducting TDS and other tax credits, are liable to pay advance tax in four instalments. These instalments have to be paid by March 15, June 15, September 15 and December 15.

Any individuals who have failed to pay their advance tax or have paid less than 90% of advance tax will be liable to pay an interest at 1% per month under section 234B.

For example, Mr Mobeen is liable to pay Rs 15,000 as tax for FY 2019-20 which has reduced to 12,000 after TDS. Mr Mobeen filed his ITR on November 30.

Since he failed to pay an advance tax, he will be levied an interest of 1% per month from the first date of the assessment of April 1, 2020. However, as part of the COVID-19 relief, he'll be charged 0.75% from April 1 to June 30 and 1% from July 1 to the month of filing. Mr Mobeen is liable to pay Rs 570 as interest.