The government recently extending the deadline for filing the income tax return (ITR) for the financial year 2020-21 (the assessment year 2021-22) to December 31, 2021, in order to provide relief to taxpayers amid the COVID-19 pandemic.

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Many individual taxpayers with tendencies to procrastinate may delay the filing of their ITRs now until the year-end. This, however, is not advisable and experts suggest filing it as early as possible and not wait till the extended deadline.

The obvious reason: late filing can result in interest charges. Taxpayers are required to clear their liabilities at the end of the financial year, else the dues attract penal interest, according to the Income Tax law.

In an interaction with CNBC-TV18, Kapil Rana, Founder & Chairman at HostBooks Ltd said that though the CBDT has extended the due date for filing of ITR, it has provided no relief on the penalty for late filing of returns under sections — 234A, 234B and 234C of the Income Tax Act 1961.

“Under section 234B, if the taxpayer has not paid advance tax or has paid less than 90 percent of the tax liability, he/she will have to pay interest at the rate of 1 percent per month or part of the month from April till the date of payment of tax. Under section 208, a person is liable to pay advance tax if his/her tax liability for the year is Rs 10,000 or more. So, even if the individual is late in filing ITR, it is better that they pay the advance tax at the earliest. Interest under section 234C is levied when advance tax paid is less than the prescribed installments,” Rana explained.

“Hence, a taxpayer is required to pay 15 percent, 45 percent, 75 percent, and 100 percent by June 15, September 15, December 15, and March 15 respectively. If there is a shortfall in advance tax payment, interest at the rate of 3 percent is charged for that particular quarter,” he informed CNBC-TV18.

As far as the advance tax payment is concerned, it is important to note that an individual who is resident in India having age 60 years or more and having income other than income from business and profession is not required to pay tax in advance. Hence interest under sections 234B and 234C shall not affect such a person.

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In cases where the amount of tax on the total income after deduction of the amount of advance tax, TDS/TCS, any relief of tax allowed u/s 89, 90, 90A and 91 and alternate minimum tax credit, exceeds Rs 1 lakh, Rana said that the interest under section 234A is applicable because as far as tax payment is concerned, there are no issues faced by the taxpayer.

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