The Income Tax Department has been reminding taxpayers to file income tax returns for assessment year 2017-18.
If you are in the taxable bracket, you must file income tax returns. The Income Tax Department has been reminding taxpayers to file income tax returns for assessment year 2017-18. In order to avoid last minute rush, it is best if you file income tax returns well beforeJuly 31. In case you miss this deadline, you can still file your income tax returns but in that case, it may invite a penalty of up to Rs. 10,000. Besides this, a delay in filing of income tax returns also makes you liable to pay interest.
Here are five things that will happen if you do not file income tax returns on time:
1) Penalty: A three-tier fee system has been introduced for not filing income tax return within due date. If return is filed beyond due date but before December 31, then fees payable will be Rs. 5,000 whereas in other cases it will be Rs. 10,000. However, in case of taxpayers whose total income does not exceed Rs. 5,00,000, the fees payable shall be restricted to Rs. 1,000.
2) Reduced time for revising your income tax returns: “Let’s say you are filing your ITR and you end up making a mistake. Under the changed rules, you only have time till March 2019 to make the change (for ITRs for FY 2017-18). Earlier, taxpayers had a 2-year long window to revise and resubmit an erroneous ITR, which has now been decreased to one year from the end of the financial year. “Therefore, the earlier you file, the longer would be the window available with you for revising your returns to rectify errors if any,” said Archit Gupta, Founder & CEO ClearTax.
3) Interest to be paid on tax amount: When income tax return is not filed within the due date, interest at the rate of 1 per cent per month or part of the month is levied up to the date of filing the same. The said interest is payable on tax payable after deducting the TDS (tax deducted at source), TCS (tax collected at source), advance tax and other reliefs/ tax credits available under the law, said Chirag Chordia, Qualified Associate-Direct Tax, N.A. Shah Associates LLP. TDS is deducted by buyer or payer while TCS is collected by receiver/payee/seller.
4) No carry forward of losses: If income tax return is not filed within the due date, the taxpayer will not be allowed to carry forward any loss under the head “profits and gains of business or profession” or “capital gains”. However, unabsorbed depreciation and loss under the head “income from house property” shall be allowed to be carried forward, experts said.
5) Delay in processing of return of income: Once the return is filed and verification of the same is duly completed, the Central Processing Centre, Bangalore, of the Income Tax Department processes the income tax return. It is only then that the tax liability or refund of taxpayer is determined. Thus, in case the taxpayer is claiming a refund, delayed filing of income tax return will result into a delayed receipt of the tax refund.
It is thus advisable for every taxpayer to file income tax return well in time and avoid various consequences including levy of mandatory fee.