Here's how much you should pay for filing tax

As July 31 deadline approaches for filing income tax returns (ITR) in India, tax experts shed light on the varying costs associated with filing an Income Tax Return (ITR) based on different methods and levels of assistance. The most budget-friendly option remains the official government portal, enabling taxpayers to file their returns for free.

However, for individuals seeking the convenience of private tax filing portals while managing their taxes independently, charges generally range from Rs 200 to Rs 250. It is important to note that many taxpayers opt for expert assistance to ensure accurate filing and maximise deductions.

"Using a private portal with tax expert assistance could cost around Rs 750 to 1,000. However, taxpayers with capital gains from financial assets might face higher costs, reaching Rs 2,000 to Rs 3,000," Amit Gupta from SAG Infotech told Republic. 

"Those with foreign assets, especially complex cases, may have to pay even higher charges. Individuals with relatively straightforward foreign asset situations may incur Rs 3,000 to Rs 4,000, while those with more intricate scenarios could face charges ranging from Rs 4,500 to Rs 7,000," Gupta added.

Taxpayers dealing with extensive foreign assets and intricate reporting requirements may need to allocate between Rs 7,000 to Rs 10,000 for expert help. Gupta emphasised the importance of considering these costs while choosing the most suitable option based on individual tax situations and requirements.

Incorrect filing of ITR can have serious financial implications, as highlighted by Naveen Wadhwa, CA and taxation expert. Filing returns after the due date of July 31 may lead to the disallowance of losses, making it impossible to carry them forward and set them off in subsequent years.

Fees for late filing

Wadhwa pointed out that late filing fees range from Rs 1,000 to Rs 5,000 until December 31, based on income levels. "Additionally, interest at 1 per cent per month will be levied until the date of filing. After December 31, taxpayers can file updated returns only if there is a tax payable, but an additional tax of 25 per cent will be charged for returns filed until March 31, 2024, and 50 per cent thereafter until December 31, 2024," he said.

Consequences of incomplete filing

The consequences of non-filing or incomplete filing can be severe. The assessing officer has the option to initiate assessment using the best judgment method, and penalties of up to 50 per cent may be levied for underreporting income, and up to 200 per cent for misreporting income. Non-filing could result in the issuance of a notice for prosecution with imprisonment ranging from 3 months to 7 years, along with a fine.

Considering the financial implications of disallowed losses, interest, penalties, and the risk of prosecution, tax experts urge taxpayers to file their returns on time, availing themselves of the improved e-filing experience and resources.

Taxpayers have various routes to file their ITR, including using the income tax department's e-filing website for free or seeking the services of a chartered accountant. Online third-party websites such as Taxmann, ClearTax, Tax2Win and more, also offer filing services, but they come with associated charges.