Consequences of Late Filing of Income Tax Returns
The last date for efiling of income tax return is usually 31st July of the next financial year for a salaried individual. For example, if you wish to e-file income tax return for the earnings during financial year 2014-15 then the due date of filing of income tax return will be 31st July 2015.
In case you miss the due date of filing of income tax return then don’t feel dejected. You can still e-file your income tax return. The income tax return that you e-file after the due date is called a belated return.
In this article you are going to learn the consequences of late filing of income tax return and penalty if you e-file after the due date of filing of income tax return.
Filing of Belated returns has following consequences:
1. Incremental interest on taxes
An incremental interest at the rate of 1% per month (U/s 234A) will be payable on the unpaid amount if the full tax has not been paid before the due date of filing of income tax return.
Suppose If your unpaid amount of tax as on 31st July (due date of income tax return) is Rs. 5000 and you were unable to file it on time then from 1st August you will be required to pay additional interest of 1% per month on Rs. 5000 till the date of filing of return. This is in addition to the 1% per month interest for non-payment of advance tax, that is, tax due after tax deduction at source exceeding Rs 10,000.
Thus, late filing of income tax returns can result in an additional interest burden.
2. Revision of Belated Return is not possible
In case you miss the deadline of filing of income tax returns then you need to be extra careful while filing late income tax returns as a Belated Income Tax return cannot be revised, unlike a return filed within the original time limit, which can be revised within a specified period.
3. Carry forward of certain losses
One of the major negative consequences of late filing of income tax returns is the inability to carry forward business or capital losses for set off against future profits and gains. In order to carry forward such losses, it is mandatory to file the return before due date of filing income tax returns.
However, the loss from house property does not have this limitation and can be carried forward even if the return is filed late. So, it’s better to gain from losses as early as possible.
4. Penalty for late filing of income tax return
There is a discretionary penalty of Rs 5,000 if the return is not filed within a year from the end of the financial year
For example, there will be no penalty if the income tax for the financial year 2013-14 is filed by 31 March 2015. A person can still file the income tax return even after 1st April 2015 but before 31st March 2016 but a penalty of Rs. 5000 may be imposed if it is filed after 31st March 2015.
Time limit for late filing of Income Tax Return
The return of income can be filed within a period of two years from the end of the financial year concerned. For e.g., the belated return for financial year ended on 31 March 2014 can be filed by 31 March 2016. After that it becomes time-barred and therefore it cannot be filed. However if belated return is filed between 1st April 2015 to 31st March 2016 then a discretionary penalty of Rs. 5000 may be imposed as discussed in clause 4 above
So what are you waiting for? If you have not filed return yet, e-file Income Tax Return now.
Income Tax Slab For Financial Year 2014-15 December 30, 2014
How to e-File Income Tax Return? January 15, 2015