The government earned up to Rs 627 crore from late ITR filing fees by August 22, 2024. Late filing fees of Rs 5,000, Rs 1,000, or none are imposed for filing a belated ITR. Approximately 14 lakh ITRs were filed between August 1, 2024 and August 22, 2024.
Belated Income Tax Returns on Government Revenue
The due date to file an income tax return for FY 2023-24 (AY 2024-25) for individuals not liable for tax audit expired on July 31, 2024. If you have missed filing your ITR by July 31, 2024, you can file a belated ITR by paying a penalty. According to the Income tax department’s press release dated August 2, 2024, more than 7.28 crore (7,28,80,318) ITRs for FY 2023-24 (AY 2024-25) were filed till July 31, 2024.
However, according to the latest data on the income tax e-filing portal, about 7.4 crore (7,42,75,307) income tax returns (ITRs) were filed as of August 22, 2024, at 3.06 pm.
This means that more than 13.94 lakh ITRs (7.42 crore minus 7.28 crore) were filed between August 1, 2024, and August 22, 2024. The majority of these are likely to be belated ITRs filed by individuals who missed the July 31, 2024, deadline to file. As the figures, as presented on the income tax website, appear to be comparative, therefore the assumption that most of these would be ITRs filed for FY2023-24 appears reasonable. There is no deadline for filing of ITRs for previous years near about July 31 or in August, so this increases the likelihood of these 13.94 lakh ITRs being belated ITRs for FY2023-24 (AY 2024-25).
According to income tax rules, a late filing fee of up to Rs 5,000 is levied for filing a belated ITR after the due date. Small taxpayers with taxable income up to Rs 5 lakh are required to pay a late filing fee of Rs 1,000 only. There is no late filing fee for taxpayers filing belated ITR where the total income does not exceed the basic exemption limit. In general parlance, taxpayers refer to a late filing fee as a penalty for missing the ITR filing deadline.Remember, the deadline to file a belated ITR is December 31, 2024, for FY 2023-24 (AY 2024-25). Therefore, a taxpayer can file a belated ITR between August 1, 2024, and December 31, 2024, for FY 2023-24 (AY 2024-25).
The government is earning revenue from the late filing fee/penalty paid by the taxpayers for filing belated ITRs. The question arises of how much would be the total fees/penalty paid by people filing belated ITRs in the last 22 days. This amount would equal the estimated revenue earned by the government from the late filing fees/penalty in the last 22 days.
Estimating the Government’s Revenue
Recent statistics indicate that over 7.4 crore income tax returns (ITRs) were filed as of August 22, 2024. This represents an increase of more than 13.94 lakh ITRs filed between August 1 and August 22, 2024.
It is important to note that there is no deadline for filing ITRs for previous years around July 31 or in August, thereby increasing the likelihood of these 13.94 lakh ITRs being belated filings for the FY 2023-24.
According to income tax rules, a late filing fee of up to Rs 5,000 is levied for filing a belated ITR after the due date. However, small taxpayers with taxable income up to Rs 5 lakh are required to pay a late filing fee of Rs 1,000 only. Additionally, there is no late filing fee for taxpayers filing belated ITR where the total income does not exceed the basic exemption limit.
The revenue earned by the government from these late filing fees has raised an important question: how much has the government collected in late filing fees/penalties over the last 22 days?
Various Scenarios and Estimated Revenue
- Scenario 1: Assuming 10% of the 13.94 lakh ITRs were filed by taxpayers who were not required to pay a penalty or were required to pay a lower penalty of Rs 1,000, the estimated total penalty amount earned by the government is approximately Rs 627 crore.
- % of ITR filers between Aug 1-22 who did not pay/ were not required to pay a penalty: 10%
- Estimated belated ITR fee amount (In Rs): 627 crore
- Scenario 2: Assuming 20% of the 13.94 lakh ITRs were filed by taxpayers who were not required to pay a penalty or paid a lower penalty than Rs 5,000, the estimated total penalty amount earned by the government is approximately Rs 557 crore.
- % of ITR filers between Aug 1-22 who did not pay/ were not required to pay a penalty: 20%
- Estimated belated ITR fee amount (In Rs): 557 crore
- Scenario 3: Assuming 30% of the 13.94 lakh ITRs were filed by taxpayers who were not required to pay a penalty or paid a lower penalty than Rs 5,000, the estimated total penalty amount earned by the government is approximately Rs 488 crore.
- % of ITR filers between Aug 1-22 who did not pay/ were not required to pay a penalty: 30%
- Estimated belated ITR fee amount (In Rs): 488 crore
- Scenario 4: Assuming 40% of the 13.94 lakh ITRs are filed before the October/November deadline, or there is no penalty for specified taxpayers filing belated ITRs, or their penalty is Rs 1,000, the estimated total penalty amount earned by the income tax department is approximately Rs 418 crore.
- % of ITR filers between Aug 1-22 who did not pay/ were not required to pay a penalty: 40%
- Estimated belated ITR fee amount (In Rs): 418 crore
- Scenario 5: Assuming 50% of the 13.94 lakh ITRs are filed before the October/November deadline, or there is no penalty for specified taxpayers filing belated ITRs, or their penalty is Rs 1,000, the estimated total penalty amount earned by the income tax department is approximately Rs 348 crore.
- % of ITR filers between Aug 1-22 who did not pay/ were not required to pay a penalty: 50%
- Estimated belated ITR fee amount (In Rs): 348 crore
As expressed by Prakash Hegde, a practicing chartered accountant, the government is estimated to have earned Rs 348,74,72,500 from collecting fees for belated ITR filing if 50% of taxpayers from 13.94 lakh ITR filers filed belated ITRs.
In conclusion, the revenue earned by the government through late filing fees and penalties for belated ITR filings highlights its significance in relation to the income tax filing process.
