You may face these penalties if you don’t pay tax on time

The recent data provided by the Central Board of Direct Taxes (CBDT) revealed that India has a less number of honest tax payers. Merely 1.7% or 2 crores Indians paid income tax during the assessment year 2015-16, while only 4.06 crore or 3.2% Indians filed their tax returns.

The data also stated that collection from income tax stood at Rs 1.88 lakh crore in 2015-16, lower from Rs 1.91 lakh crore in the previous year.

Since most of us are not aware of the penalties we might face in case we do not pay income tax, the details of those penalties are given here as:

Penalties for Sell-Assessment Tax (SAT)

SAT is required to be commuted by the taxpayer on his or own self deposits with government. This shall be paid before filing for income tax returns.

As per Section 140A(1) any tax due (after allowing credit for TDS, advance tax, etc.) along with interest under Section 234A, 234B and 234C (if any) should be paid before filing the return of income. Tax paid as per Section 140A(1) is called ‘self-assessment tax’.

Section 140A(3) says, if a person fails to pay either wholly or partly self-assessment tax or interest, then he will be treated as assessee in default in respect of unpaid amount.

Section 221(1) says, if a taxpayer is treated as an assessee in default, then he shall be held liable to pay penalty of such amount as the Assessing Officer may impose and in the case of a continuing default, such further amount or amounts as the assessing officer may, from time to time, direct.

However, the total amount of penalty cannot exceed the amount of tax in arrears.

Penalties for under-reporting income

There are many who under-report their income in order to reduce their tax liability. In such cases, Section 270A, the taxpayer’s rate of penalty shall be 50% of the tax payable on under-reported income.

However, in a case where under-reporting of income results from misreporting of income, then the taxpayer will pay penalty at the rate of 200%  of the tax payable on such misreported income.

Penalties for late filing of ITR

According to Section 200(3) – the I-T Act, 1961, an employer is required to issue Form 16 to the employees revealing the total Tax Deducted at Source (TDS) on income.  While Section 206C(3) says – a person is needed to file for Tax Collected at Source (TCS) return.

In case a person fails to file these returns before due date, then under Section 234E, they are liable to pay, by way of fee, a sum of Rs 200 for every day during which the failure continues.

Amount of late fees, however, shall not exceed the amount of TDS/TCS.

Also, the TDS/TCS return cannot be filed (after prescribed due date) without payment of late filing fees as discussed above.

Income Tax slabs

If you are a salaried person and earn up to Rs 2.5 lakh, you are not liable to pay any income tax. However, if you earn between Rs 2.5 lakh and Rs 5 lakh, you have to pay 5% income tax.

As for earnings between Rs 5 lakh and Rs 10 lakh, you need to pay 20% income tax, and those who earn above Rs 10 lakh and above, they have to pay 30% income tax.

Notably, if a person earns between Rs 50 lakh and Rs 1 crore he/she will pay only 10% income tax. While those earning over Rs 1 crore have to pay 15% of income tax. However, the people who earn in crores also pay additional 3% service charge.

Individuals are supposed to pay these taxes till the age of 60 years.

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