Even a little carelessness in financial matters can cost you dearly. If you delay in filing Income Tax Return (ITR) or do not give correct information about your earnings, the Income Tax Department can impose a penalty of up to 200 percent on you. Under the Income Tax Act, tax evasion or hiding income is considered a serious crime. Under Section 270A, if a taxpayer under-reports his income, he will have to pay 50 percent of the tax on that hidden income as penalty. The matter does not end here. If it is proved that you have knowingly concealed facts, made false entries or made wrong claims (misreporting), then this penalty can increase up to 200 percent of the tax.
Disadvantages of not filing returns on time
Often people avoid filing ITR till the last date, which proves costly later. According to Section 234F of the Income Tax Act, late fees of up to Rs 5,000 may have to be paid if returns are filed after the deadline. However, for those whose total annual income is less than Rs 5 lakh, this fee has been limited to only Rs 1,000.
Apart from this, there is a penalty of Rs 200 for every day under Section 234E of delay in filing TDS or TCS statement. If you do not maintain the required books of account, a penalty of Rs 25,000 can be imposed under Section 271A. At the same time, in case of not getting the audit done, a fine of 0.5 percent of the turnover or a maximum of Rs 1.5 lakh may have to be paid.
Indians going to Britain got relief
While on one hand there are strict tax rules, on the other hand the government has brought a good news for those working abroad. India-UK Free Trade Agreement (FTA) and ‘Double Contribution Convention’ (DCC) are coming into force from July 15. According to Union Commerce and Industry Minister Piyush Goyal, earlier when Indian professionals used to go to work in Britain for 2 to 5 years, about 25 percent of their salary was deducted in the National Insurance Contribution (NIC) there. Since it is necessary to stay in Britain for at least 10 years to avail pension benefits, Indians did not get any future benefit from their deducted amount.
Your money will increase in Indian PF account
After the new agreement this picture will change completely. With the implementation of ‘Double Contribution Convention’, 25 percent of the salary of Indians who go to Britain for short assignments up to 5 years will no longer be kept by the government there. Instead, that money will be deposited directly into their Provident Fund (PF) accounts in India. Employees will continue to get tax-free interest of 8.25 percent on this deposited amount. This step will not only increase the current earnings of Indians working abroad, but will also create a large retirement fund for their old age and social security of their families.
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