The deadline for filing income tax returns for individuals is July 31. If you haven’t filed your ITR yet, you might want to avoid crossing the deadline. The government has not put any monetary penalties for crossing the deadlines. However, you would miss out on a lot if you file it even one day after the deadline. Here is how.
The penalty proposed for people people missing the deadline doesn’t apply till next year and it also doesn’t apply for ITRs filed for the financial year 2016-17. However, delays would could potentially lead to a loss of a lot of money.
Firstly, filing of returns is important now more than ever. This is especially important if you made cash deposits in your bank accounts over Rs 2 lakh during demonetisation which is November 9, 2016-December 30, 2016. It has been made mandatory to report such transactions for FY2016-17 or Assessment Year 2017-18. It is also likely that the IT department may contact you via written correspondence asking you to file your return in time.
Anyone who has registered with the Income Tax Department, has filed a return before, linked their Aadhaar with their bank accounts and/or PAN is most likely to get an sms from the IT department reminding them to file their ITR.
What are the losses?
If you want to claim refunds on advance taxes paid or on tax deducted at source, you will lose the interest payable to you by the IT department on the said amount. The IT department calculates the interest on refund from the start of the assessment year i.e. April 1 till the date of granting of refund.
However, if you file the returns late, the interest is calculated from the return filing date. For example, if you filed your return on July 31, the interest will be calculated from April 1. However, if you filed your return on August 1, the calculation will be done from August 1. So, the delay of even a day means loss of four-month interest (April-July)
You will also not be able to carry forward losses except in cases of loss from house property. You can’t carry forward losses from capital gains, business income, income from speculation business etc if you file your return after the deadline. Even if you have paid the tax in time, your losses will not be carried forward if you don’t file your return in time.
Late filing of return with unpaid tax liability
You will have to pay penal interest of 1 per cent per month from the due date of return filing till the actual day of filing if you file your return after due date with unpaid tax liability. This penalty can be accompanied by prosecution by the IT department if the return is filed later than the assessment year and if it exceeds Rs 3,000.
What if you don’t file the return in the relevant assessment year?
In case you fail to file your tax return by the end of the assessment year (for financial year 2016-17, assessment year is 2017-18) but you have paid all the tax liabilities, the tax department will impose a penalty of Rs 5,000 on you if you can’t convince them that the delay was justified or due to an unavoidable/uncontrollable circumstance.
