What Is The Penalty for Failure to File a Proprietorship ITR?
The deadline for reporting ITR is before the end of the fiscal year on July 31st. To ensure that everyone files their ITR before the due date, the Income Tax Department sends reminders to taxpayers via email, SMS, and other means. Each year, the income tax return must be filed before the due date. As a result, we avoid any future issues, and you will not be penalised.
If a taxpayer forgets or misses the ITR filing date, they must pay a penalty of up to $10,000. However, this penalty amount is only effective for the fiscal year 2019-20. The penalty amount has been reduced to 5,000 beginning with the fiscal year 2020-21 and going forward. It is also important to know that if your income is less than the taxable amount, you do not have to pay any penalties even if you file your ITR after the deadline.
How Do I File an ITR for a Proprietorship?
To file a proprietorship ITR, you must gather certain paperwork and keep certain points in mind. We’ve outlined the steps you must take to file a proprietorship’s income tax return below.
- The Income Tax Department issues a PAN card to each taxpayer. A PAN card is required to begin the process of submitting an income tax return for a sole proprietorship.
- The proprietorship’s owner must have a PAN card, which must be utilised to pay income tax.
- You must use your PAN card to register on the e-filing portal in order to file your income tax return.
- Navigate to the e-filing menu and select the income tax return option.
- Choose the tax year, ITR form, and filing type.
- Complete the submission by entering the required information.
- You will be taken to a new page that will request certain mandatory details; carefully fill in the details and click on continue.
- After you’ve entered all of the necessary information, double-check it.
- You can also pick between a single physical filing and E-verification. You have 120 days after filling out the online form to alter the information.
- A ‘preview and submit’ option will display. Simply click on it.
- Before submitting, double-check for any errors.
- After submitting the application, you will receive an OTP that must be input within 60 seconds for successful verification.
The penalty for failing to file an Income Tax Return (ITR) for a sole proprietorship in India can be substantial. A penalty may be imposed under the Income Tax Act if a proprietor fails to file the ITR by the due date provided by the tax authorities. The penalty amount is determined by several factors, including the amount of revenue earned, the length of the delay, and the nature of the noncompliance.
Late filing can generally result in a Rs. 5,000 penalty. In addition, interest on the unpaid tax liability may be assessed. Non-filing of ITR can also result in lost tax benefits, difficulties obtaining loans, and legal implications, emphasizing the need for timely and accurate ITR filing for a sole proprietorship.