Before analyzing the management of late fees and penalties, let’s first check the due dates.
INCOME TAX DUE DATES
| Furnishing of Income Tax Return (ITR – Non Audit) | 31/12/2021 |
| Furnishing of Audit Report (Other than Transfer Pricing) | 15/01/2022 |
| Furnishing of Income Tax Return (ITR – Audit case and partner of auditable P’ship firm)) | 15/02/2022 |
| Furnishing of Audit Report (Transfer Pricing –Sec 92E) | 31/01/2022 |
| Furnishing of Income Tax Return (Transfer Pricing – Sec 92E) | 28/02/2022 |
| Belated Return / Revised Return | 31/03/2022 |
| ROC DUE DATE | |
| Date for filing Cost Audit Report to BOD | 30/11/2021 |
| Annual Filings of Company (AOC 4 / MGT 7) | 31/12/2021 |
| Annual Filings of LLP (Form 8) | 30/12/2021 |
| GST DUE DATE | |
| Filing of GSTR 9/9C | 31/12/2021 |
So, apparently we can summarize the same into following two due dates (Because once books are finalized within below due dates, rest of the due dates can be easily complied):
- For Non Audit Assesse, income tax return is to be filed on or before 31st December, 2021 and so the books are to be finalized before that date.
- For Audit Assesse, tax audit report is to be filed on or before 15th January, 2022 and so the books are to be finalized before that date.
Now, check the late fees / penalty clause for belated filings:
| Head | Particulars | Late Fees / Penalty |
| Income Tax | Total Income < 5 Lacs (Late Fees) | Rs. 1000 |
| Income Tax | Total Income > 5 Lacs (Late Fees) | Rs. 5000 |
| Income Tax | Audit Report (Penalty) whichever is lower. | 0.5% of total sales / receipts
Or Rs. 1,50,000 |
| ROC | Form 8 / AOC 4 / MGT 7 etc. (Late Fees) | Rs. 100 per day per form |
| GST | GSTR 9 / 9C | Rs. 200 per day per form |
Now, kindly note the following for effective designing the sequence for finalizing the books and filing the same:
| Sr. No. | Scenario | Solution |
| First and foremost, feasible option is that you complete all filings in time. Below scenarios only if you feel that all will not be in time. | ||
| 1. | If you having multiple firms / taxpayers wherein some are under audit and others are non-auditable | Kindly finalize the Firms Wherein Audit is applicable.
Reason – ITR late filing fees will be max. Rs. 1K / 5K but audit penalty may go up to Rs. 1.50 Lacs. |
| 2. | If you having multiple firms / taxpayers all are non-auditable | Kindly finalize the firms wherein total income may exceed Rs. 5 Lacs as the late fees is higher in that case. |
| 3. | If you are having loss making entities
1. Loss making and profit making firms (Non Audit) 2. Loss Making (Non audited) and profit making (Audited) |
If you are having loss in the F Y 20-21 then you MUST file your ITR in time to carry forward the same.
So, the situation may be like Finalize and file Loss making firms ITR. Compare the tax benefit of loss v. penalty in belated filing of audit report |
| 4. | If you are having high income firm which may lead to high tax | Interest on income tax is levied on month / part of the month i.e. same interest for 1st day of the month and last date of the month.
So, compare the additional interest cost for delayed filing with the cost of interest / late fees / penalties of other firms. |
| 5. | If you are having a LLP / Company | Please note that ROC has not extended any due date for filing the form. It has just waived the additional fees till specified date.
Simple Meaning – After expiry of that date, late fees will be levied from expiry of original due date and not from extended date. |
| 6. | GSTR 9 / 9C | You can keep its priority as the last.
Reason – If books are not finalized, then you cannot file the same. The late fees is Rs. 200 per day. So even if you file it 5 days late then you will reach up to Rs. 1000 late fees. While ITR will take minimum Rs. 1000 late fees. |
This is just permutation and combination of some of the scenarios. You may work out based on different situations.
Further, late / additional fees are deductible exp. under Income Tax Act while Penalty is not.
We have ignored the probability of date extension for this analysis.
For late / additional fees, no show cause notice is required and thus cannot be waived while for penalty, show cause notice will be required and so can be waived.
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