Do not forget to file income tax returns

| August 5, 2013

With electronically filed income tax returns increasing each year and the last day rush slowing the Income Tax (I-T) department website, the last date for filing returns is being extended over the past couple of years. For financial year 2012-13, the deadline was July 31 but it was extended to August 5.

While this extension is a huge respite for those who have not filed their returns yet, do not relax with more time in hand. It may result in unfiled returns. But, there are repercussions for missing the deadline.

For starters, you can file returns even today. Those with no other income (except salary) can file their returns even after the deadline. The department is lenient and allows filing belated returns for next two years. For financial year 2012-13, you can file belated return till March 31, 2015.

However, if belated returns are not filed till March 2014 and there is no outstanding tax, you can be charged a penalty of Rs 5,000. But, in case of an outstanding tax, you will be levied an interest (under Section 234 A) at 1% per month above the penalty.

There can be another chargeable interest component under Sections 234(B). It deals with delay in depositing advance tax and charges 1% interest per month starting April 1, 2013, till such time the outstanding amount is paid.

“Section 234(B) is applicable only to those who have an outstanding advance tax liability exceeding Rs 10,000. However, if one has paid 90% of the outstanding advance tax liability then 234(B) is not applicable,” says Kaushik Mukherjee, executive director (Tax & Regulatory Practices), PricewaterhouseCooper.

If you give a reason for not filing on time, like accident, hospitalisation or deputation abroad, the department may waive off the fixed penalty.

Rakesh Nangia, managing partner of Nangia & co Chartered Accountants says a recent Delhi High Court order has upheld prosecution for willful defaulters, that is, one who did not file returns even after getting a notice from the department.

“Those filing belated return cannot revise their returns in case of any error,” says Amarpal Chadha, partner – tax and regulatory services at Ernst & Young.

You can carry forward losses in investment (equity or mutual funds) in the relevant financial year for exemption in the subsequent years only if you filed your returns by the deadline, says Nangia. There is a provision to set off investment gains against losses over the next eight years. However, loss from house property and unabsorbed depreciation is an exception which can be carried forward even if you don’t file returns by the deadline.

This apart, if you delay the filing of returns, your tax refund process can get delayed. There are chances of landing an enquiry letter from the department. You may also have to forfeit the interest on the refund pending for the period the returns have been delayed. If the refundable amount is more than 10% of the total tax payable, you are entitled for a simple interest of 0.5% on that amount.

There are benefits of filing returns as well. If applying for a permanent account number, home loan or a personal loan, income tax documents come handy. A good record can ensure quick processing of the loan and substantially reduce hassles. Also, if you want to travel abroad, these papers have to be part of the visa application.

Source:- Business Standard

http://www.business-standard.com/article/pf/do-not-forget-to-file-income-tax-returns-113080500356_1.html

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Category: Finance Ministry, Income Tax

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