Despite being well aware of the due date for filing income tax returns – July 31 (August 5 this year) – many tax-payers fail to complete the process on time.
That, however, does not mean that they have missed the chance to file their returns altogether. All assessees are permitted to file returns pertaining to up to two preceding financial years even after the ‘last’ date of July 31.
Now, filing a belated return is not without its share of hitches. However, the good news first. Latecomers are allowed to file their returns until the end of the assessment year. That is, for the current assessment year 2016-17 (financial year 2015-16), you can file a return until March 31, 2017. You will not have to shell out any penalty for the delay. If you fail to file your returns by this date too, the I-T department offers you another lifeline – your returns will be accepted till the end of the succeeding assessment year, or, March 31, 2018.
Now, the bad news. Despite the lifelines on offer, it is best to file your returns on time, especially if you have any tax payable, in which case you might be charged a penal interest of 1% on the amount for every month of delay post July 31 (or August 5 for the current assessment year). You may have to forgo the benefit of carrying forward losses incurred under the head ‘Capital Gains’, ‘Income from other sources’ or ‘Business and Profession’, which could have otherwise reduced your tax outgo in the subsequent assessment year. Moreover, you could also lose out on any interest due on tax refund from the I-T department. Besides, the processing of your tax refund, itself, could get delayed.
Penalty could come into picture for all taxpayers who fail to file their returns by the end of the applicable assessment year. For instance, those filing their returns after March 31, 2017. In such cases, the assessment officer has the power to impose a discretionary penalty of up to Rs 5,000. However, this is not cast in stone and the I-T officials may consider waiving it off if you are able to provide a convincing reason for your failure to complete the task before the end of the assessment year.
Monetary implications apart, you will not be allowed the leeway of filing a revised return in case you notice errors in your original return later. While this sounds like a minor hiccup, the fact is that many tax-payers do end up committing mistakes, thanks to the tedious nature of the process. To avoid letting go of benefits due to you because of such errors, you could consider running your belated return through a tax expert before filing it. This will change from the next assessment year, when revisions will be allowed even for belated returns.
Given the complications involved in deferring returns filing beyond the due date, it is best to aim for timely filing of tax returns, notwithstanding the grace period available to you.