Penalties applied for income tax return submission now, what tax benefits cannot be availed?

The deadline for individual taxpayers to submit income tax returns has now expired. The filing period ended on 31 March.

However, what happens to those who, for unavoidable reasons, have still not submitted their returns?

Will they face severe consequences? The answer is no. Taxpayers may still submit their income tax returns even now.

They may file outstanding returns for up to the previous two tax years. However, they must pay a penalty and will also lose access to several tax benefits.

Although this will increase costs, it will spare them from future complications.

If a taxpayer fails to submit a return for any year, they will later need to provide a reasonable explanation for that failure when filing future returns.

At present, more than 12.5 million (1.25 crore) people hold Taxpayer Identification Numbers (TINs).

Among them, approximately 4.25 million (42.5 crore) taxpayers submitted returns last year, declaring their income and expenditure. The remainder did not file returns.

From this year, almost all taxpayers must submit returns online. Since the deadline has passed, taxpayers filing late will lose certain benefits and must pay penalties.

For instance, taxpayers must now file online through the National Board of Revenue (NBR) website. They will not require anyone’s permission to do so. A 2 per cent interest charge will apply to the assessed tax amount.

This interest may accumulate for up to 24 months, reaching a maximum of 48 per cent. Taxpayers may submit returns online throughout the year.

Furthermore, taxpayers who file after the prescribed deadline will not qualify for tax rebates.

The government currently offers tax relief for investments in nine specified sectors. However, taxpayers filing after the deadline will lose entitlement to these benefits.

The rules for investment-related tax rebates allow taxpayers to claim the lowest of the following three amounts: 3 per cent of total income, 15 per cent of total eligible investment, or a maximum of Tk 1 million (10 lakh).

When submitting returns online, taxpayers may pay taxes through internet banking, debit or credit cards, and mobile financial services.

They may also download and print copies of submitted returns, acknowledgement receipts, income tax certificates, and TIN certificates.

NBR tax officials stated that two-thirds of newly registered TIN holders do not submit returns.

Over recent years, the government has made TIN registration and return submission mandatory for accessing various public and private services.

As a result, many individuals obtain TINs solely to access services but do not file returns.

Taxpayers who applied for an extension before 31 March will not face penalties. They will also remain eligible for tax rebate facilities.

If they submit returns within the extended deadline, they may file returns in the same manner as taxpayers who submitted within the original filing period.