Many taxpayers see the Income Tax Department as a heartless
organisation that is ready to haul them over the coals for the smallest
of mistakes. However, there is a soft side to the taxman as well, which
is evident from the rules for late filing of tax returns. For instance,
if you have missed the deadline for filing your income tax return,
there's no need to be worried.
The tax department accepts returns till the end of the assessment year.
If all your taxes are paid, you will not be levied a penalty or get a
notice for non-filing as long as you file the return for 2012-13 by 31
March 2015. However, if there is some tax to be paid, you will have to
give a 1% late payment fee for every month of delay since April 2013. If
the tax due is more than Rs 10,000, you should have paid an advance
tax. Advance tax is payable in three tranches—30% is to be paid by 15
July of the relevant financial year, 60% by 15 December and 100% by 31
March.
If advance tax has not been paid, the penalty per month will be applicable from the due date of the advance tax. There's even a small window of reprieve for the ultra-lazy taxpayers, who haven't filed their returns for the past two years. They can do so for the income earned in 2011-12 by 31 March 2014. However, this will be treated as a belated return and there could be a `5,000 penalty for late filing depending on the discretion of the assessing officer.
Tax experts say the penalty is rarely slapped if all taxes have been paid. The assessing officer invokes this provision only when there is an additional tax liability. The salaried individuals and retirees, whose income is subject to tax deduction at source, are on dry ground. However, keep in mind that there may be some income on which you have not paid tax. Although there is now a Rs 10,000 deduction on interest earned on savings bank deposits, the income from other bank deposits and infrastructure bonds bought a few years earlier is fully taxable.
Though the tax laws give you a grace period if you file your return late, you also forgo some of your rights as a taxpayer. For one, you cannot modify your tax return if it has been filed after the due date. If you have filed by the due date, you can alter it any number of times before the end of the assessment year, or till the return is assessed. However, after the due date, you are not allowed to change it. So if you miss out on any deduction or exemption, you can't claim it later.
You also cannot carry forward any short-term or long-term losses if you have filed after the due date. The taxpayers, who have filed by the due date, can carry forward capital losses and adjust them against future capital gains. They can also carry forward these losses up to eight financial years. For instance, if you had suffered capital losses in 2012-13, these can be adjusted against gains till 2020-21.
If advance tax has not been paid, the penalty per month will be applicable from the due date of the advance tax. There's even a small window of reprieve for the ultra-lazy taxpayers, who haven't filed their returns for the past two years. They can do so for the income earned in 2011-12 by 31 March 2014. However, this will be treated as a belated return and there could be a `5,000 penalty for late filing depending on the discretion of the assessing officer.
Tax experts say the penalty is rarely slapped if all taxes have been paid. The assessing officer invokes this provision only when there is an additional tax liability. The salaried individuals and retirees, whose income is subject to tax deduction at source, are on dry ground. However, keep in mind that there may be some income on which you have not paid tax. Although there is now a Rs 10,000 deduction on interest earned on savings bank deposits, the income from other bank deposits and infrastructure bonds bought a few years earlier is fully taxable.
Though the tax laws give you a grace period if you file your return late, you also forgo some of your rights as a taxpayer. For one, you cannot modify your tax return if it has been filed after the due date. If you have filed by the due date, you can alter it any number of times before the end of the assessment year, or till the return is assessed. However, after the due date, you are not allowed to change it. So if you miss out on any deduction or exemption, you can't claim it later.
You also cannot carry forward any short-term or long-term losses if you have filed after the due date. The taxpayers, who have filed by the due date, can carry forward capital losses and adjust them against future capital gains. They can also carry forward these losses up to eight financial years. For instance, if you had suffered capital losses in 2012-13, these can be adjusted against gains till 2020-21.
However, this benefit is not available to the late filer. The other problem with late filing is that you get tax refunds late. The earlier you file the return, the faster it is assessed and you receive the refund. Even if it gets delayed due to clerical errors and bureaucratic sloth that government departments are notorious for, you will earn an interest. This is because the interest on refund is calculated from the time that you file your tax return.
5 facts on belated returns:
1) No difference in filing procedure The process of filing before or after the deadline is the same. However, don't forget to mention in the tax form that the return being filed is a belated one.
2) Responding to a tax notice If the belated return is being filed in response to an income tax notice, mention this in the return. Last year, 9.75 lakh notices were issued for non-filing.
3) Don't ignore the notice from tax department Prosecution proceedings can be initiated against the taxpayer if he ignores a notice for non-filing of tax return in case the payable tax exceeds Rs 3,000.
4) Taxman lenient for genuine cases The tax department is considerate if the taxpayer is unable to file returns by the due date due to a genuine reason, such as serious illness or injury.
5) Lower interest on your tax refund If the tax refund is delayed, the taxpayer is eligible for interest, but it starts accruing from the time he files his return. Late returns earn less interest.
Source: Economic Times
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