Usually, July 31st is the last date for filing your tax returns. For the assessment year 2016-17, the government even extended the deadline up to August 5. Even then, several people failed to furnish their tax returns on time.
There is no reason to fret! According to the Income Tax Law, even if you failed to file your income tax returns within the prescribed deadline, you can file the belated returns within two years of the end of the particular financial year. Even with the exemption limit set to ₹250,000, fewer than 4% of Indians file tax returns every year. The general perception is that, since Tax Deducted at Source or TDS has been paid, filing tax returns is no longer necessary! Also, with the possibility of filing of FY 2015-16 taxes by 31st March 2018 also available, a lot of people become lax in their responsibility towards tax filing. Filing Belated Returns For the returns related to FY 2015-16 and assessment year 2016-17, you can file your belated returns only till 31st March 2018. Even if you fail to file your returns, it is wise that you calculate the tax amount due and pay it on time to avoid attracting any penalty! Because in case you file belated returns and you still need to pay a tax of ₹10,000 or above on your income, you will be liable to pay a delayed interest on the amount due! Delayed interest is calculated under Section 234A at 1% (SI) per month for each delayed month till you paid the tax. For calculation purposes, the interest calculation starts from the date subsequent to the due date till the returns are filed. For ease of calculation, even partial month will be considered as a complete month. Penalty for Late Filing of Returns For failing to file the tax returns within the prescribed deadline, there is no automatic penalty, but it depends on the judgment of the tax officer. In case you even fail to file for belated returns within the specified time, you can attract a penalty of ₹5,000 under Section 271F. When you don’t pay your taxes and willfully miss all return filing deadlines, you become liable for prosecution and penalty under the provisions of the IT Act. Budget 2016 According to the Budget 2016, the time period for the late filing of income tax returns has been reduced from 2 years to 1. Previously, in FY 2016-17, the taxpayer could file his belated returns for the last two financial years, i.e., for the financial year 2014-15 and 2015-16. Any returns related to FY 2013-14 or back could not be filed at all! But now, for the assessment year 2016-17, the taxpayer will have to file his returns before the pertinent assessment year ends! Therefore, the window of opportunity for filing back returns has narrowed down even more! What You Miss When Filing for Belated Returns When you file your returns on time you get the opportunity to file for revised return. But for belated returns, the Income Tax Department doesn’t allow for such claims. In fact, making changes in belated returns attracts serious penalty! In case you are entitled to a tax refund, late filing of income tax returns causes a delay in its processing. The Income Tax Department pays an interest of ½% for every month from 1st April onwards after filing your returns on time. Filing for belated returns means you lose a portion of the interest paid by the Income Tax Department because the date of calculation of interest would now start from the filing of delayed returns. Also, you will not be able to carry forward any of your capital losses to offset them against future capital gains. It is possible only when the returns are filed within the stipulated time frame. Conclusion Be very careful while filing for belated returns. Ensure there is no mistake or error while filling out the Income Tax form because you will not get an opportunity for filing revised returns. Remember to finish the verification process because the acknowledgement for ITR-V will be sent to the Income Tax Department. Though there is no time-limit specified for e-verification, the 120 day time limit applicable to post sent ITR-V could be levied on e-verification too!
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Archana SinghFinance and Investment Blogger Archives
March 2017
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