Filing your income-tax returns (ITR) in a timely manner is a legal requirement for everyone earning a taxable income. For those not in the taxable bracket, filing their returns is important to document their financial activities in a year, and to reclaim any tax that may have been deducted at source.
The deadline for filing income tax returns is July 31 each year. Sometimes, we may miss this deadline. Missing the deadline is not a calamity. But you must take immediate steps to get your paperwork back in order by filing your returns belatedly. Here is a look at your options in case you have missed the deadline.
Deadline for filing your ITR
The last date for filing income-tax returns as salaried individuals or as working professionals is July 31 each year. Usually, the income-tax department extends the date by a few days to allow for the last minute rush that allows late bloomers to file their returns on time. For example, this year the last date for filing returns was extended from July 31 to August 5.
For all your income earned in the financial year 2015-16 or assessment year 2016-17, this was the last date applicable for filing your ITR. If you have somehow missed both these deadlines, worry not. There’s still hope for you. As per the regulations of the
I-T department, you can file a belated ITR. The deadline for doing this is within one year of the end of the relevant assessment year. So for ITRs pertaining to FY2015-16 which had their last date of filing at August 5, 2016, you can file a belated return latest before March 31, 2018.
However…
While the income-tax department allows you to file your returns belatedly, there may be consequences and penalties applicable. Let’s take a look the disadvantages of late filing of returns.
Penalty: If you are filing your ITR after the stipulated deadline, you can be levied a penalty under Section 271F of the Income-Tax Act. The tax officer reserves the right to consider your delayed ITR and may impose a penalty as high as '5,000 for failing to file your returns on time. Additionally, the tax officer has the right to recommend a penalty with possible prosecution in rare cases.
Interest on tax due: Delayed filing of your ITR leaves you vulnerable for payment of an additional interest on the due tax amount under Section 234A of the I-T Act. A simple interest of one per cent per month is levied on your due tax amount calculated from the first day post the last day of regular ITR submission.
Late refunds earn no interest: If you are expecting any tax refunds from the I-T department, a late or delayed filing may mean your ITR gets processed late thereby resulting in delayed refunds. Unlike those who have submitted their ITR on time, you will not be liable for any interest on delayed tax refunds. You effectively lose out on the 1.5 per cent interest per month that the I-T department pays calculated from April 1 of the relevant assessment year for delayed refunds.
No chance of revision: Filing your ITR on time offers you the option of revising your returns should the need arise in event of incorrect submissions or miscalculations. Filing a belated ITR does not give you any such opportunity. So even an unintentional mistake in your belatedly filed ITR can be liable for a penalty when scrutinised by the income-tax department.
No set off against loss: You will have to let go of any “set off losses” you may have sustained in the financial year if your ITR is filed late. Except for losses due to house property, no other losses can be carried forward in such a case.
The disadvantages aside, you must absolutely file your tax returns in order to maintain the continuity of your income and tax documentation. This is especially important in case you need a loan. Lending institutions would assess your application through multiple data points, one of them being your tax returns.
(The writer is the CEO of BankBazaar.com)
