InvestorQ : What happens to those who did not file the tax returns by the due date?
Mitali Bhutta made post

What happens to those who did not file the tax returns by the due date?

1 week ago

As of now we have to still await clarity, but here is what we can infer from the statements of the CBDT and the finance minister.

· Any extension or leeway on the tax filings is now ruled out. Compared to last year, the number of returns were substantially lower this year. Those who could not file returns have to pay the penalty.

· The penalty will range from Rs1,000 for income under Rs5 lakhs and will be Rs5,000 for income above Rs5 lakhs. Investors can still file their tax returns up to December 2022, but they will have to pay this penalty before filing their returns. Also, in the case of any tax dues, interest on the dues will also be charged.

· Currently, in India any individual with annual income in excess of Rs2.50 lakhs is obliged to file returns. Returns have to be also filed in case of other conditions like large expenses undertaken, foreign travel, having capital gains, having foreign income etc.

· The number of returns filed for FY22 is nearly 50 lakhs lower than FY21, so there is going to be a substantial amount of penalties that the government would end up collecting from the non-filers.

· In the last 2 years, the government had given liberal extensions to the tax filing date due to the lag effect of COVID. However, in Fy22 the government refused to give any leeway. Most people had put off filing their returns in the hope that they would be able to file returns in the extended time period. However that was not to be.

The government may give some leeway to those who file returns but could not e-verify by the deadline of 31st July. However, for the others, the penalty would still apply