like the government has got into serious mode. In the last one month the I-T
department has sent about 1 lakh notices to tax defaulters across the nation
asking them to file returns and pay up advance tax and other dues.
There is hardly
anyone who would be ignorant of due dates but blame it on procrastination- many
people miss the deadline and some don't file it at all. Perhaps if everyone were aware that they might miss out on certain privileges by not filing income tax return on time, some
might be motivated to act on time. We will deal with possible
consequences of not paying taxes in another article.
Due date for filing I-T return
recap, income tax returns are to be filed on or before due date which usually
falls on 31st July of the relevant assessment year. Sometimes this
date gets extended and the department notifies it. Let's also touch upon who needs to file income tax returns.
Do you need to file tax returns?
For FY 2013-14 Income Tax Return is to be mandatorily filed by
everyone whose income is over Rs 2 lakhs, ie the minimum taxable bracket.
whose income is over Rs 5 lakhs it is mandatory to file tax returns online,
others can do it online or in paper format. E-filing has certain benefits over paper filing and eventually it will totally replace paper filing of tax returns.
What if you don't file returns on time
understandable; you could have unintentionally missed I-T return deadline for a
variety of reasons. You can file returns by the end of the relevant assessment year
without paying penal fees or by the end of the next assessment year with a penal fee, if you are asked to.
income tax returns can be filed belatedly by 2 years; after that you cannot
file returns. Therefore tax returns for financial year 2013-14 can be filed by
31st March of 2015 without penal fee or by 31st March of 2016 with a fee if the department so demands.
look at two situations possible- you have income tax dues or you do not.
as you don't have any income tax dues you don't have much to worry about. You
can file your tax return by the end of the assessment year. You will not be charged
any penalty or interest for filing returns late up to 31st March. But if you miss the assessment year as well you can file returns
the following year, with a penalty of Rs 5000 (based on section 271F of I-T
Act), if the Assessing Officer demands. If he does not, well and good!
you missed return filing deadline and you also owe some tax as advance tax or
self assessment tax? In this case you cannot skip interest along with the tax
while filing returns before the end of the assessment year. Simple interest at
the rate of 1% every month is to be paid on your income tax dues (your total
tax liability less any TDS and advance tax that was paid) from due date to the
date when the return is filed. This is based on section 234A of I-T Act.
tax liability from salary for financial year 2013-14 is Rs 20,000 and it is paid
as TDS. Suppose you sold your shares and made a profit of Rs 1 lakh and were
liable to pay income tax of Rs 10,000 on the capital gain, which you did not
pay by due date of assessment year 2014-15. In this case if you file returns in
December 2014 you'd have to pay Rs 10,500 (10,000 + 1% of 10,000 for 5 months)
as tax. If you do not clear your dues by March end and file returns in the
following assessment year the tax and interest for all the months and possibly
penal fine of Rs 5000.
What could be lost if income tax returns are
not filed by due date
If you have
deductions to claim or have losses to carry forward you cannot afford to miss filing
returns by due date. Here's why:
1. Any tax refund due to you will be delayed. Refunds can be expected anywhere from 2 months to 2 years.
2. If you
have losses to be carried forward to following assessment years, these
can be carried forward only if returns are filed by due date of the relevant
assessment year. Loss from house property is exempt from this.
3. If you
discover later on that you made errors in filing return you stand no chance to
revise it unless it was filed by due date. This is the prerogative of those who
are on time!
What if you don't file returns at all?
tax returns are not filed within 2 years of the financial year, you lose the chance to file it. This means
you cannot claim refunds if tax return is not filed in 2 years.
I-T department going totally internet-based in the future and PAN
being a necessity in all financial and real estate transactions it would be
easier for the taxman to pick out those who have not filed returns or worse
still not cleared income tax dues. You don't want them coming for you with a
But you have your own good
reasons. You might need 3 years' I-T returns for getting a bank loan. If you're
planning a foreign trip, you would need it for the visa proceedings as well. File
your tax returns on time- after all it is a desirable personal finance habit to
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