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Importance of due date

To avoid any interest or late fee from the income tax department, you should file your income tax returns within the due date set by the Income Tax Department.

The due date is the date by which you should file your income tax returns to avoid any interest, penalty or late fee. In case you fail to file your tax returns within the due date, you shall have to pay interest under section 234A and penalty under section 234F. However, the income tax department can extend the due dates of a particular FY by issuing an official notification and notifying in the official Gazette.

What are the due dates for filing your income tax return

The due date differs from taxpayer to taxpayer. In case you are an individual, you will have to file your tax returns usually by July 31st of every assessment year.

Taxpayer category	Due dates
Individuals/ Body of Individuals (BOI)/ Association of Persons (AOPs)/ Hindu Undivided Family (HUF), Trusts	July 31st
Companies/ Firms/ LLP/ Individuals and others who are subject to Tax Audit under the Income Tax Act	October 31st
Companies (Registered under Companies Act 2013)	October 31st
Taxpayers required to furnish Transfer Pricing Report as per Section 92E of the Act	November 30th

What happens if you fail to file your income tax return within the due date?

In case you miss filing your income tax returns within the due date, you will have to incur penal costs in the form of interest and penalty which have been mentioned below:

Interest under section 234A: An interest of 1% per month or part of the month will be charged in the outstanding tax liability as computed in your return. You will have to pay interest from the due date till the date you actually file your return. However, if you do not have any tax outstanding or you have a tax refund, then no interest under section 234A shall be charged.
Penalty under section 234F: A maximum penalty of INR 5,000 (INR 1,000 if your total income is upto INR 5 lakhs) is charged, if your income tax returns (ITR) is filed after the due date.
Adjustment of losses: You will not be allowed to adjust and carry forward the losses you incurred during the year except for losses incurred under house property.

An overview of Income Tax in India

Taxes have been around since times immemorial. In the new age, Indians started paying taxes in 1860. There were several amendments in the following years, but India needed a revamped taxation structure after independence.

The Income Tax Act was passed in 1961 and came into force on the 1st of April 1962. It contains 298 sections along with 14 schedules and thousands of subsections. Under this Act, every person whose income exceeds the basic exemption limit is liable to pay tax to the government.

Who needs to pay tax?

If we dig deeper in the Act, it states that all the earning individuals/businesses are liable to pay tax. The current union budget has some exemptions to the rule. But here is a list of assessees who come under the tax purview:–

Self-employed
Corporates
Salaried Individuals
Firms/ LLPs
Partners of LLP/ Firm
HUF (Hindustan Undivided Family)
BOI (Body of Individuals)
AOP (Association of Persons)
Legal artificial persons &
Local authorities

What are the different heads of income under Indian income tax?

As per the existing rules of the Income Tax Act, 1961, the tax department bifurcates the income of an assessee under five heads –

Income from Salary
Income from Capital Gain
Income from House Property
Profits and Gains earned through Business & Profession
Income that do not fall under the above four categories form part of Other Sources

Chapter VI-A

After computing your Gross Total income, the income tax department allows certain deductions in respect of several investments made or other permitted expenses. Most of them are covered under Chapter VI-A which enable you to reduce your taxable income and consequently your tax liability.

How is the rate of tax decided on a given income?

The Indian taxation regime follows a slab-based taxation system for individuals, HUFs. It is based on the net taxable income of the assessee and is progressive, i.e., higher the earnings, higher the tax. Some items do not fall under these slabs, and they have a separate specific tax rate, such as 20% for long term capital gains, 30% for winning the lottery, etc.

Income Tax Return (ITR)

If your income is above the maximum exemption limits, or you intend to request a refund from the income tax authorities, you must file your income tax returns and pay taxes. There are occasions where you want to carry forward your losses. In such cases also, you will have to file returns, even if your income is below the basic tax slab. If you have no tax liability, you can voluntarily file your tax returns for the following reasons –

It helps the tax department to set up a record.
It allows faster processing of loans.
It makes registration of immovable properties easier.
Banks don’t issue credit cards unless you have a tax return filing history.
To claim TDS refund
To carry forward the losses

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