Deadline for ITR filing extended but doesn't provide relief from interest penalties

The pandemic led the Government of India to provide relief by extending the ITR filing for the financial year 2020-21 till September 30, 2021. Keeping the hardships caused due to Covid-19, the government has given multiple extensions to the taxpayers last year also. Under sections 234A, 234B and 234C of the Income Tax Act 1961, the taxpayer has to pay interest on the outstanding tax.

Here are the details of the penal interest to be paid on the extension of the ITR filing date:

The interest rate will be charged by 1% every month on the outstanding tax amount as per section 234A. For a delay of 5 or 6 days, the amount will be charged for the entire month. It is considered as a delay of one full month, even though the filing of the income tax returns is extended to September 30.

And if the tax liability is more than Rs 1 lakh, then the interest must be paid for both the months of August and September. The interest will be levied if the self-assessment tax is more than 1 lakh. There is relief under section 234A that if the tax liability is above 1 lakh, interest will be paid on the delay in filing the income tax.

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If a person has not paid advance tax or has paid 90 percent of the tax liability, he/she also has to pay an interest rate of 1 %under section 234B. The defaulter's payment of advance tax installment is also required to pay interest under section 234C.

The taxpayers need to pay an interest of 15 percent,45 percent,75 percent, and 100 percent advance tax by the 15th of June, September, December, and March. A decrease in the advance tax payment can result in a 3 percent interest in that quarter.