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The cost of Filing Belated Tax Returns

Returns for income earned till FY12- 13 can be filed till March 31. But you might have to cough up a penalty and pay interest on the tax liability

July 31 is typically the last date for filing returns. However, those who missed this deadline can file their returns by March 31. Belated returns can be filed on or before two years from the end of the relevant tax year. So, even those who missed filing their returns for income earned in FY12- 13 or assessment year 2013- 14 can do so by March 31, 2015. However, no belated returns can be filed for years prior to assessment year 2013- 14.

While the I- T department allows taxpayers to file belated returns, assessees need to be aware of a few limitations in doing so.

Limitations

If any error is found in the return filed for assessment year 2013- 14, these can be revised only up to March 31, 2015. It is advisable to take the help of a chartered accountant or tax return preparer to file late returns. Don't forget to include income from bank fixed deposits, income from royalty, winnings from lotteries and any sum or gift exceeding 50,000 received from a non- relative, which is not on the occasion of marriage or under a will or inheritance.

Once a belated return is filed by an individual, this is final and cannot be amended in the future. So, one needs to be absolutely certain on the income being disclosed, deductions/ exemptions being claimed and tax credits/ reliefs being claimed.

Taxpayers should avoid some common mistakes while filing belated returns. This could be offering bank or fixed deposit interest on an estimated basis instead of the actual basis or not matching Tax Deducted at Source ( TDS) credits claimed in the return of income with that reflected in Form 26AS. Or forget to club income of a minor child or spouse from assets transferred by the transferor spouse.

Those who haven't filed returns for either assessment year 2014- 15 or 2013- 14 can't carry forward their capital losses to the next year. Usually, capital losses can be carried forward for eight assessment years and set off against capital gains. Short- term loss may be adjusted either against short- term gains or taxable long- term gains, while long- term loss can be adjusted against taxable long- term gains.

Assume you had made losses of 10,000 on sale of stocks in assessment year 2014- 15. In normal circumstances, you would have been allowed to carry forward the capital losses, either short- term or long term in nature, till assessment year 2022- 23. This won't be allowed now, since you'd missed the July 31 deadline for filing returns.

Those who file belated returns may also be denied refunds. If refund of any income tax is due to the tax payer, the revenue authority may deny the interest for the period of delay. Refunds for those filing returns before the due date take at least six months to reach the assessee, according to experts.

Penalties, charges

A penalty of 5,000 may have to be paid by those who haven't filed returns for assessment year 2013- 14. However, the choice of levying this is with the assessing officer.

If there are taxes payable, interest is payable on the tax liability at the rate of one per cent per month up to the date of payment of such taxes. However, no interest is payable if no tax is due. For most salaried employees, the tax due would be nil or negligible because employers would have deducted the applicable tax by way of TDS.

Advance Taxes

For individual tax payers, advance tax is due in case the tax liability is more than 10,000 after accounting for TDS. Additional interest will have to be paid if the deadlines for advance tax ( of 30 per cent by September 15, of 60 per cent by December 15 and 100 per cent by March 15) have not been met. The interest charged will be one per cent per month for three months after the first deadline and another one per cent on the cumulative tax due for three months after the second deadline. If you miss the March 15 deadline, you have to pay one per cent interest on the entire defaulted amount for every month until the tax is fully paid.

Section 276CC

Not filing tax returns on time can land you in jail. This can happen if the I- T authorities feel the assessee wilfully failed to furnish returns on time and the tax due is more than 3,000. Under section 276CC of the I- T Act, if the amount of tax exceeds 25 lakh, the assessee can be sentenced to rigorous imprisonment for anywhere between six months to seven years, and fined. In other cases, imprisonment can be between three months and three years, with fine.

|It is advisable to take the help of a CA or tax return preparer to file late returns |Belated returns cannot be revised |Those filing belated returns can't carry forward capital losses to the next year |Penalty of 5,000 possible if filing returns for assessment year 2013- 14 |Interest on tax liability at one per cent per month up to the date of payment of such taxes |Those filing belated returns may be denied refunds |Wilful defaults on tax payment can land you in jail

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

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