Skip to main content

Do not skip Filing ITR

 

Do not delay or skip filing your ITR

Late filing of income tax returns (ITR) invokes not only penalties but can also cause you to lose out on benefits such as interest on refunds


Paying taxes and filing tax returns on time is every taxpayer's responsibility. However, it is interesting to note that this has benefits for the taxpayer too and not filing returns or delaying them beyond the due date can have repercussions. Following are some of the negative implications of delaying the return-filing process or avoiding it.


Missing the tax-filing deadline may lead to penal consequences or receiving a notice from the income tax department. Your tax liability may also increase since you may have to pay certain prescribed penalties.


A taxpayer is liable to pay advance tax if the expected tax liability for the year exceeds Rs10,000. Advance tax needs to be paid in four instalments, which are due on 15 June, 15 September, 15 December and 15 March. If you do not pay advance tax, make a short payment or delay in filing the income tax return; you are liable to pay penalties as mentioned below.


Interest for deferment of advance tax: This interest is payable at 1% per month for delay in payment of advance tax on quarterly basis. This is payable on the amount of quarterly shortfall, starting from the date on which the advance tax was due.


Interest for default in payment of advance tax: This interest is also payable at 1% per month or a part thereof on the amount of tax due as on 31 March of the financial year till the final payment.


Interest for delay in filing tax return: This is payable if you file the tax return after the due date. It is payable on the net taxes due as on 31 March of the financial year. It is chargeable from the first day (usually, 1 August for individuals) following the due date (which is usually 31 July).


There is a way to avoid these penalties. Tax filing cannot be done unless a person deposits his tax liabilities to the government on a regular basis. He can, therefore, pay his taxes within the due date and file his tax returns on time. This will save him from having to pay additional interest on the same.


If a person fails to furnish his tax returns even after the expiry of 1 year of the financial year for which income tax return was to be filed (i.e., before the end of the relevant assessment year), the assessing officer may impose a discretionary penalty of Rs5,000, under section 271F of the income tax Act. But this position will change starting FY 2017-18. According to Budget 2017, if a person fails to file his tax return by the due date of 31 July, he will have to pay a compulsory late filing fee of Rs 5,000. Further, if he delays filing the return beyond 31 December of the assessment year, he will be liable to pay a late filing fee of Rs10,000. In the case of small taxpayers with the income up to Rs5 lakh, the maximum fees shall not exceed Rs 1,000.


It's important to note here that the discretionary penalty will now be replaced by mandatory late filing fees. Therefore, delaying the return filing can hurt you badly.


This penalty can be avoided if you are able to provide the assessing officer sufficient convincing reasons for the delay. However, under the proposed amendment, the assessment officer will have no discretion to waive the late-filing fees and therefore the only way to avoid this is to file the tax return before the due date.


Prosecution can also take place in rare and extreme cases, if the assessing officer finds that the taxpayer has wilfully failed to furnish the tax return within the due time. The penalty in such cases may be any one of the following:


(i) If the tax payable is less than Rs 25 lakh, the taxpayer may have to face a minimum imprisonment of 3 months and up to 2 years;


(ii) If the tax payable is more than Rs 25 lakh, the taxpayer may have to face a minimum imprisonment of 6 months, up to 7 years.


Generally, tax officers give the assessees sufficient notice and time to comply with the filing requirement and the taxpayers should not ignore any notice from the income tax officer. It is advisable that they pay the taxes and file the tax return within the time allowed by the officer.


Apart from penalties, there are other losses to that you would suffer by not filing on time.


The income tax Act provides you an interest at the rate of 0.5% per month on the excess tax you may have paid. Interest in such a case shall be allowed for a period starting from 1 April of the assessment year, to the date on which the refund is granted. No interest is payable for the period attributed to the delay in filing the tax return beyond due date, by the taxpayer.


You can carry forward your losses under various heads of income that you may have incurred in the financial years, to the next 8 assessment years. These losses can be used to set-off future gains and can thus result in savings. You must file your tax returns and claim the related losses before the due date (31 July or 30 September, as applicable to you).


If you file a late return, you cannot revise it in case of any error or omission; you will lose the interest amount that you may earn on the refund under Section 244A.


Tax return filing is a process that needs to be done regularly to establish a good record. Often, people file returns for more than 1-2 financial years in a single year in order to comply with bank or visa application requirements. This may, however, lead the tax authorities to form a bad impression, that you haven't been regular in filing income tax. Other benefits of filing return on time include getting faster refunds, smooth processing of loans, and even visa processing.




Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300




 

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now