Penalty on late filing of ITR and other tax changes effective from Apr 1

Penalty on late filing of ITR and other tax changes effective from Apr 1

Several major income tax changes have come into effect from the start of the new financial year, i.e., April 1, 2018. These include penalty on late filing of income tax returns (ITR), medical reimbursement and transport allowance becoming taxable, and a 10 percent tax on long-term capital gains (LTCG) from listed shares and equity-oriented mutual funds. Knowing these tax changes will help plan your income and taxes better in the new fiscal.

Here’s a list of all the tax changes that have come into effect from April 1.

  • Penalty on late filing of ITR

Starting from April 1, if you file your ITR post the deadline of July 31, 2018 (unless the tax department extends it), you will be liable to pay a maximum penalty of Rs 10,000.

As per the new law, a penalty of Rs 5,000 will be levied if the return is filed after the due date but before December 31 of that year and Rs 10,000 post December 31. However, as relief to small taxpayers, if your income is not more than Rs 5 lakh,  the maximum penalty levied will be Rs 1,000.

  • Reduction in the time limit to revise your ITR

Apart from penalty on late filing of ITR, if you make a mistake while filing for FY2017-18, then you would have time till 31 March, 2019 to file your revised return.

Earlier a taxpayer was allowed to revise his returns up till two years from the end of the financial year for which the return was filed. However, from now on, he will be allowed to revise his return only up till one year from the end of the financial year.

Therefore, for the financial year ending on 31 March, 2018, a person will have time till 31 March, 2019 to revise his ITR. The normal deadline for filing return for FY17-18 would be July 31, 2018.

  • Medical reimbursement and transport allowance to become taxable

If your salary includes medical reimbursement and transport allowance, then these two items will become fully taxable in your hands from April 1. The proposal was announced in Budget 2018.

Until and including FY 2017-18, income tax laws allowed transport allowance up to Rs 19,200 and medical reimbursement up to Rs 15,000 in a year to be claimed exempt from tax. Medical reimbursement was tax-exempt only if the actual bills were submitted to the employer but transport allowance did not require submission of bills.

However, in lieu of the above allowances, standard deduction of Rs 40,000 from salary and pension will be available. You can claim this deduction next year for FY 2018-19 (assessment year 2019-20) at the time of filing ITR.

  • Hike in cess levied on tax liability

Starting from FY 2018-19, the cess levied on the tax liability will be hiked by 1 per cent to 4 percent, as proposed in the budget. The cess will be called ‘Education and Health Cess’, replacing the current 3 per cent education cess.

You will feel this impact when TDS is deducted from your salary and at the time of paying your income tax liability.

  • Levy of LTCG tax on shares and equity-oriented mutual funds

LTCG from the sale of shares and equity-oriented mutual funds will attract tax at a flat rate of 10 percent. Indexation benefit (adjusting the purchase cost with respect to inflation) will not be available. Further, LTCG up to Rs 1 lakh in one fiscal will be exempted from tax. Click here to read more about how this LTCG tax will be calculated.

Click here to use LTCG calculator 

  • DDT introduced for equity mutual funds

Dividends declared in equity-oriented mutual fund schemes will come under the purview of dividend distribution tax (DDT) with effect from April 1. The tax will be levied at 10 percent and will be deducted by the fund house before paying dividends.

  • Senior citizens to get more benefits

Starting from 1 April, interest income earned by senior citizens will be exempt up to Rs 50,000 a year. This includes interest income earned from savings bank/post office accounts, fixed deposits (FDs) and recurring deposits (RDs). This tax benefit is available to them under the newly inserted section 80TTB of the Income tax Act. TDS will be deducted only if interest income is more than Rs 50,000 in year.

However, if you are claiming tax benefit under section 80TTB, you cannot avail it under section 80TTA. Under section 80TTA, interest earned from savings account (bank/post office) up to Rs 10,000 is exempt from tax.

Additional benefits are also available on premium paid for medical insurance. Health insurance premium paid for senior citizens will be allowed a maximum tax-break of Rs 50,000 under section 80D.

Senior citizens who do not have health insurance can also avail this benefit for medical expenses incurred. It is advisable to keep the prescription and medical bills handy in case the tax department might require it in the future.

Tax benefit under section 80DDB has also been increased to Rs 1 lakh for treatment of specified diseases such as chronic kidney diseases (CKD), cancers etc.

  • Changes in section 54EC

Bonds issued under section 54EC for saving tax on LTCG will be issued for a tenure of five years with effect from April 1, 2018, instead of three years. Added to this, it will be possible to save tax via these bonds for capital gains arising from only land, building or both. Earlier capital gains from other assets like debt mutual funds, jewellery etc could be invested in these bonds to save tax.

  • Tax-free withdrawal for NPS account holders

Self-employed and professionals will now be able to withdraw 40 percent of their National Pension System (NPS) corpus tax-free when they close or opt out of it. Salaried employees are already allowed to withdraw 40 percent of their NPS corpus tax-free.

24 Replies to “Penalty on late filing of ITR and other tax changes effective from Apr 1”

  1. Dear sir,
    I am unemployed since July 2016, hence I haven’t filled return as I had no Income, but still I want to file return for FY 16-17 & 17-18 to be in continuation. Will such people get opportunity to file return in this month (April 2018) ?

    1. Dear S R Bhoir,

      Last date to file return for the FY 2016-17 was on 31.3.2018 and hence now you can not file the return for that year. For FY 2017-18, the due date to file return is 31.7.2018, so you are advised to file the return within due date. Anyone not having any taxable income can also file the return, so there is no restriction on that.

    2. No, it’s immaterial regarding ur income, time limit to file the return was fix. (Except in special case).

  2. Till date ITR Forms for internet filling of returns are not available on net and the department is insisting on early filling of returns and setting up penalty rules for late filling. The law was passed more than 1 year back and they have not been able to put up the necessary forms on web.
    The banks and institutions have not yet up dated Form 26AS, 16 etc. They will probably do that by Mid May/June. It is difficult to file returns unless the details are verified.

    1. Dear Dilip,

      New ITR forms for FY 2017-18 (AY 2018-19) are already notified but offline utilities may be under preparation and will be available soon at
      Since due date of filing TDS statements for Q4 (January to March-2018) is 31.5.2018, your form 26AS will get updated only after the deductee has filed their TDS statement. Form 16 (for salary) and form 16A (others) will also be issued by 15.6.2018. Even after all these dates, individual tax payers having required to file their return before 31.7.2018 still will have 1 & half months to prepare and submit the return, which I feel is sufficient.

  3. This way or that way, squeeze and loot the genuine income tax payer – that s the only policy. Big fish escape all nets.

    1. Very correct. If multi million income holders , if they show their real income , pay their tax as per law , I am sure at least sr. Citizen can be benefitted by raising the taxable income limit.

  4. We take salary given by income tax and after taken salary we start to given sgst& cgst ultimately all money goes for tax paying to govt.

  5. Sir my 2 elder Brothers get Expierdin Last 3 Years, And Iam an Small self Employee, And I not Have sufficiant Income Even I Dont know how to follow These, Thank You

  6. In case I. T. Returns could not be filed for last 2-3 years, how can this b done now. I may add that while drawing pension and consultancy , I have already paid Tax due and payments I got only after deduction of T. D. S. Forms 16 and 16 A have already been issued by my employers. Delay in filing returns was due to travel and Health issues
    I may please be helped with a remedy

  7. Dear, Dr, khalid
    If u have suffice evidence , u can go 4 a application regarding the matter fact, to ur concern CAT.

  8. I am a senior citizen retired from govt.service.My Fy-2016-2016-I had claimed refund.However due to some mis calculation by IT dept.I was asked to pay Tax and panelty.

    I have represented my case online and off line to my ITO and Incometax ombudsman.However my refund is still pending as on 20th April 2018.

    Can any expert suggest how to resolve this ??? Thanks in advance

  9. error corrected in earlier message

    I am a senior citizen retired from govt.service.My Fy-2015-2016-I had claimed refund.However due to some mis calculation by IT dept.I was asked to pay Tax and panelty.

    I have represented my case online and off line to my ITO and Incometax ombudsman.However my refund is still pending as on 20th April 2018.

    Can any expert suggest how to resolve this ??? Thanks in advance

  10. I left India on 15th Feb 2018 and shall be returned on 4th August 2018.
    Now I will have to pay Rs 5000/- as penalty.
    Can we avoid this ?.
    If income tax calculations call for refund from ITR department , ten in that case also penalty is applicable?
    Can anybody clarify.

    Dhanyavad !!!

  11. Since this is a late order the penalty for crossing the due date of 31st July 218 should not be Rs 5000/-.
    For this year the penalty should be same as last year as adequate time is not given.

    I left India on 14th Feb 2018 and returning back on 4th Aug 2018 considering the normal penalty charges.
    I could have booked ticket one week before 31st July 2018.

    For crossing the due date of 31st Dec 2018 the penalty of Rs 10,000/- seems to be o.k. as adequate time is given.

    This matter must be taken to the central Government.

    Further if there is refund from ITR then penalty charges should not be there at least for this year.

    Dhanyavad !!!!!


  13. Are the pensioners eligible for standard deduction of rs.40000 IN ADDITION to exemption of rs.50000 on income from deposits?

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