Have you missed the due date of filing your Tax Returns?

Who needs to file an Income Tax Returns?

Many times, it has been observed, that the taxpayers specially the salaried class do not file their tax returns thinking that since they have already paid their due taxes by way of TDS, hence there is no need for them to file their tax returns.  No, it doesn’t work like that, because as per Income tax act, you need to file your tax return the moment your income crosses the basic exemption limit i.e. Rs. 2,50,000/- this apart from the fact that whether any tax was due or not. An even more interesting fact is the existence of Annual Information Returns (AIR) which has listed many financial transactions which puts you on a liability to file your returns irrespective of the fact, whether your income is more than 2,50,000/- or not. For example, if you enter in to certain financial transactions like your credit card payment, Mutual funds or stock investments, real estate transactions etc. and if it goes beyond a specified limit then it you need to compulsorily file your tax returns. 

When is the due date to file your tax returns?

The due date to file your tax return is 31st July of every year, but this date is not applicable to companies or those taxpayers whose books of accounts are subject to an audit, unlike salaried employees and certain taxpayers who are not supposed to get their accounts audited. PS: The due date to file your tax return for the previous financial year i.e. 2016-17 was 31st July 2017 but the same got extended to 5th August 2017.

What happens if you miss the deadline of 31st July and did not file your tax returns?

Do you need to press the panic button in case you did not file your tax returns, No, because when it comes to the due date of filing your tax returns, the income tax law is not too strict specially if all your due taxes have already been paid. So, no need to worry because even if you have missed the due date of filing tax returns, you can still file it with no additional penalty given the fact that you do not have any outstanding taxes to be paid.

How can you still file your tax return after the due date? 

Though nothing gets changed procedure wise, what it means is that you still need to follow the same process of filing your tax returns what you would have followed before the due date. The only thing that changes is in terms of the nature of the return which you file post due date, as the return filed after the deadline becomes a belated return as governed by section 139(4) of the income tax act.

What is the deadline to file a belated return?

The belated return can be filed before the end of the relevant assessment year. The important point to note is that this period was changed in the Budget 2016 and before that, a belated return could be filed within a period of one year from the end of the relevant assessment year. This new change will become effective from the Assessment year 2017-18 onwards. What it means is that you can still file the return of financial year 2015-16 for which the relevant assessment year is 2016-17 and the belated return can be filed right until 31st march 2018. Now the important point to note is that the return for the previous financial year 2016-17 can be filed only till the end of the relevant assessment year which is 2017-18, hence if you have missed the deadline of 31st July 2017 (5th August after extension) you can still file your belated return but anytime till 31st march 2018 only.

What would be your loss in case you did not file your tax returns by due date?

In case you have any tax liability to be paid then you would end up paying interest penalty under section 234 A/B/C or if you have losses to carried forward then you would stand to lose the carry forward benefit because all the losses as incurred but other than the house property loss would not be allowed to be carried forward to the subsequent years and thereby no set off will be allowed against the future profits or gains.

New Penalty for a delayed filing as per the Union Budget 2017:

In the last union budget, a penalty has been introduced for those not filing their Tax Returns on time, they will be levied a penalty of up to Rs. Ten thousand which will be applicable from the Assessment Year 2018-19. Section 234F is introduced in the Income tax act which provides for two different penalty in case of a delayed tax filing. Beyond the due date as specified under section 139. The first level of penalty will be Rs. Five Thousand in case the return is filed after the due date but on or before 31st December of that assessment year and this would become Rs. ten thousand in any other case. But for the small taxpayers, means where the total income is Rs five lakh or less then the penalty amount will not exceed Rs. one thousand. So, it is always advisable that you should file your tax returns in time and do not delay it right till the end and then ultimately may end up missing the deadline, be smart, file smart and in time.

Rishabh Parakh is a Chartered Accountant and the Chief Gardener & Founder Director of Money Plant Consulting, a leading Tax & Investment Planning Advisory Service Provider. He also runs a personal finance blogcalled “Mango Investor” aka AAM Niveshak at www.mangoinvestor.com.