What do income tax laws say about filing ITR with the new income tax regime
Once the deadline for filing ITR is missed, one can only file belated ITR using the old income tax regime. The Finance Bill, 2020 introduced a new income tax regime and came into force from the financial year 2020-21 (April 1, 2020). The Finance Bill makes it clear that in order to avail benefits under the new regime, a person has to file his ITR within the due date (usually 31st July unless extended by the government) under section 139(1) of the Income Tax Act. it happens. , 1961. If the income tax return is filed late, the taxpayer will not be able to claim the benefit of lower tax rates as provided in the new tax regime and the existing, old income tax rates will be applicable.
Due to the fact that the benefit of reduced taxes would not be available on delayed filing of ITR under section 139(4) of the Act, the late ITR filers would face problems if they changed their tax burden as per the new tax regime. is calculated.
Such taxpayers are now expected to settle their tax obligations in line with the old tax regime. This can lead to increase in tax liabilities and, as a result, higher interest rate for late payment on additional tax payment as well as late fee specified under section 234F.
Let us understand the high tax liability incurred with the help of an example.
The total income of Mr. A was Rs.18 lakh- from salary and interest income and there was no investment in it LIC, Provident Fund and Medical Insurance were made during the year under consideration. Mr. A opted for new tax regime and accordingly advance tax of Rs. 2,88,600/- was deposited. However, Mr. A was unable to file his return of income within the due date prescribed under section 139(1). Now the belated return under section 139(4) will be filed as per the old tax regime.
financial impact:
So, if you want benefits under the new tax regime, file your income tax return on time. Otherwise, you will not only be subject to late penalties for filing late returns, but will also be subject to higher tax liability.
Who is compulsorily required to file ITR?
Income tax law mandates that eligible taxpayers report their income and assets Income tax department every year. A taxpayer includes- an individual, an artificial juridical person, a body of persons, a Hindu undivided family, an association of persons, a firm, a trust, a company or a society.
Accordingly, as a rule of thumb, as per section 139(1) of the Income Tax Act, 1961, ITR should be filed within a specified time limit except in certain situations. As per section 139(1), filing of ITR is mandatory in the following circumstances:
- Anyone whose total income is above the exemption limit is required to file an income tax return by the deadline.
- Any organization including LLP (Limited Liability Partnership) or Unlimited Liability Partnership;
- any resident who has assets located outside India (which may also include a financial interest in an entity); or any resident who has the right to sign for an account located outside India. This rule applies to all the above entities. Regardless of the amount of tax payable on those incomes, the tax return must be completed in an authorized form.
- If the combined income of a HUF (Hindu Undivided Family), AOP (Association of Persons), or BOI (Body of Individuals) exceeds the prescribed exception limit, they must file an income tax return in the prescribed format along with the required documents.
(The author is a partner at IP Pasricha & Co, a chartered accountant firm.)