You must file Income Tax Return (ITR) if you are in the taxable bracket. The taxpayers have been reminded by the Income-Tax department to file income tax returns by 31st August 2018 for the assessment year 2018-19.
The five consequences in case of a delayed filing of income tax return by assesses are:
- Penalty: A three-tier fee system has been introduced for not filing income tax return within the due date. A starting penalty fee of Rs. 5,000/- has been set by the Government for a delayed income tax return. However, this fee is applicable for an ITR filed between September 1, 2018, and December 31, 2018. A penalty fee of either 10,000/- is charged, for a further delay. The fine is limited to Rs. 1,000/- for persons whose total income does not exceed Rs. 5, 00,000/-
- No carrying forward of losses: If income tax return is not filed within the due date, the taxpayer will not be allowed to carry forward any loss under the head “profits and gains of business or profession” or “capital gains”. However, unabsorbed depreciation and loss under the head “income from house property” shall be allowed to be carried forward.
- Interest payable by assessee: According to the Government, not filing the income tax return within the due date attracts interest on outstanding tax dues. When income tax return is not filed before or on the due date, interest at the rate of 1 percent per month or part of the month is levied up to the date of filing the ITR. That means a delayed filing of income tax return not only reduces the refund amount but also increases the amount payable by the assessee.
- Reduced time for revising your income tax returns: The Government gives assessees meeting the stipulated due date (August 31 this year) a chance to make revisions in the same “at any time during the assessment year or before the assessment made whichever is earlier.” A revision can be made till March 2019, for the income tax return this year (for the financial year 2017-18, and assessment year 2018-19.) Earlier, taxpayers had a 2-year long window to revise and resubmit an erroneous ITR, which has now been decreased to one year from the end of the financial year. Therefore, the earlier you file, the longer would be the window available with you for revising your returns to rectify errors if any.
- Interest reduction on refund: Did you know that the Government grants the taxpayer interest on any excess taxes paid under certain conditions? In cases where the taxpayer does not get the refund in due time, he or she is granted interest on the delayed refund. This interest is calculated at the rate of 0.5 percent per month (or part of a month) calculated from April 1 of the assessment year till the date of refund. According to tax laws, no interest is paid in case of a belated claim of refund. Also, if the amount of refund is less than 10 percent of the tax, no interest is paid. That’s the reason why missing out on the deadline costs the assessee some of the amount of refund.
Thus, it is advisable for every taxpayer to file income tax return (ITR) well in time and avoid various consequences including levy of mandatory fee.
Latest posts by CA Harshit Shah (see all)
- All You Need To Know About Advance Tax Payment - September 3, 2018
- 5 Things That Will Happen If You Do Not File Income Tax Return (ITR) By August 31 - August 28, 2018
- Goods and Services Tax (GST) – What and Why? - December 27, 2015