c

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):

ITR, GST, ROC - Late fees & penalties - Next 2 months' due dates

  • 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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Author Bio

Name: Pinkesh
Qualification: CA in Practice
Company: P Chhajed And Co LLP
Location: Ahmedabad, Gujarat, India
Member Since: 07 May 2019 | Total Posts: 6
I have started my own practice immediately after completing the Chartered Accountancy course in the year 2011. Till 2017, it was the Proprietorship with the trade name as 'Pinkesh Chhajed And Co'. In the year 2017, it has been converted to P Chhajed And Co LLP. Since a decade we are prac View Full Profile

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