ITR filing: Missed 31 Dec deadline? No penalty if you fall in this category

Individuals with gross total income below the basic exemption limit will not have to pay penalty for filing a belated ITR.

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The due date for filing the income tax returns (ITR) for the financial year 2020-21 ended on 31 December last year. Those who have not yet filed their income tax will have to pay a late fee. However, there are few who can file their ITR without a penalty even after the due date.

Till 2021, if a taxpayer missed the ITR filing deadline, the maximum penalty he or she would have had to pay was 10, 000.

However, with effect from FY21 (AY 2021-22), the penalty amount has been reduced to 5,000.

Who will not have to pay penalty for missing the ITR filing deadline?

According to the income tax laws, individuals with gross total income below the basic exemption limit will not have to pay penalty for filing a belated ITR.

The basic exemption limit applicable to a person depends on the tax regime chosen by him/her. Under the new regime, where there are no common exemptions, the basic exemption limit will be 2.5 lakh irrespective of his/her age.

However, under the old income tax regime, the basic exemption limit would depend on the age of an individual.

Please note that under the old tax regime, the basic exemption limit for resident individuals below 60 years is 2.5 lakh and it is 3 lakh for individuals above 60 years but below 80 years. The basic exemption limit for citizens above the age of 80 years is 5 lakh.

If these terms apply to a person, he/she will be able to file ITR without paying penalty even after the due date.

Conditions apply

However, there are two exceptions even for people who fit the basic exemption limit criteria. Certain section of individuals are required to compulsorily file income tax even if the gross total income is lower than the basic exemption limit.

For example, those who fall under the seventh proviso of Section 139(1) will have to pay a late fee even if their gross total income is lower than the basic exemption limit.

1) Those who have deposited an amount or aggregate of amounts exceeding 1 crore or more in one or more accounts maintained with a bank or co-operative bank fall under the above-mentioned category.

2) Those who have incurred an expenditure of an amount or aggregate of amounts exceeding 2 lakh for them or any other person for travel to a foreign country also fall under the category

3) Those who have incurred expenditure of an amount or aggregate of amounts exceeding 1 lakh towards electricity consumption fall under the category as well.

The second exception is when a taxpayer owns foreign assets such as stocks of a foreign firm. In simple words, if an individual’s gross total income is below the basic income threshold but you have income from foreign assets, then you are required to pay a penalty for filing a belated ITR.

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