How to Miss your Income Tax Returns (ITR) Deadline

Did you miss your deadline for filing the tax return by 31st July? Most of us pay the taxes before the deadline of 31st Mar, but when it comes to filing the return we are lazy people and many times we make mistakes in hurry. However very less people know that even if you have missed the deadline to file your Income Tax Returns, there is no need to panic, as when it comes to filing of your income tax returns, tax laws are not so stringent. In this article, tax implication will be explained considering all the scenarios. You being a salaried person may have missed the filing of your tax returns if you have an income on which all the taxes have been deducted or have been deposited by way of advance tax, no need to panic. There should be no additional penalty or interest for not filing the return by July 31, 2009, provided you act now. You still have the time to file your return of income for the assessment year 2009-10 till March 31-2011.
See the basics of how tax is calculated.

Rules

  • However, persons who have any Business or Capital loss to be carried forward may have a cause to worry as the said loss would not be allowed to be carried forward to next year if the return of income is not filed before the due date.
  • If you still have any outstanding taxes to be paid (after deducting TDS and Advance taxes paid, if any) you would be liable to pay simple interest @ 1% per month or part of the month, on the tax payable commencing from the date following the due date till the date of filing the return.

 

Some Basics

  • TDS: TDS is tax deducted at Source, Generally Employers deduct our taxes in advance and pay to govt in advance. TDS in detail
  • Previous Year: Previous Year means the year when we earn Income.
  • Assessment Year: Assessment year is the year when we actually pay tax for the income earned for previous year.
  • Example: So if we earn income in year Apr-2008 to Mar-2009,  2008-09 is our Previous Year and 2009-10 is our assessment year.

In case you have still not planned your taxes, here is a small guide for quick tax planning.

[ad#big-banner]

The Implications of not filing the income tax return on time and the steps to correct the situation

Scenario 1#  You do not have outstanding tax liability

In case you have already paid your taxes before 31 March, 2009, but could not file the return within the due date, you may file a return at any time before the end of one year from the relevant assessment year, simply put; for the financial year 2008-09 return can be filed at any time before 31st March 2011, however you may invite a tax penalty of Rs 5,000 u/s 271F of income tax act even if all your taxes have been paid if the same return is furnished after 31st March, 2010.

Scenario 2#  You do have some Outstanding Tax liability

If you do need to pay any balance tax, there is some financial implication. The basic principle remains the same: The income tax return for a given assessment year can be filed any time till the end of that assessment year without any penalty. If it is filed after the end of the assessment year, there may be a lump-sum penalty of Rs. 5,000. On top of this, there is a penalty of 1% per month on the net tax payable u/s 234A.

Example:

Say, your income tax liability for the year is Rs. 40,000. You have TDS (Tax Deducted at Source) of Rs. 20,000, and you have paid an advance tax of Rs. 6,000. Thus, the remaining tax payable by you is:

Net Tax Payable = Income tax liability for the year – TDS – Advance tax paid

= Rs. 40,000 – Rs. 20,000 – Rs. 6,000
= Rs. 14,000.

[ad#link-unit]

Now there are two cases, which we have to consider

Case 1:  File income tax return before the end of assessment year

Say you file your income tax return on 17th September, 2009. In this case, you would be filing your return 2 months late (partial months are considered as full months).

Final Amount = Net Tax Payable + Interest for 2 months at the rate of 1% per month Amount payable ,

= Rs. 14,000 + (2% of Rs. 14,000)
= Rs. 14,000 + Rs. 280
= Rs. 14,280

Case 2:  File income tax return after the end of assessment year

Say you file your income tax return on 4th June, 2010. In this case, you would be filing your return 11 months late (partial months are considered as full months). On top of this, you would be filing the income tax return after the end of the assessment year for which you are filing the return. So, in this case,

Final Amount = Net Tax Payable + Interest for 11 months at the rate of 1% per month + Lump sum penalty of Rs. 5,000

= Rs. 14,000 + (11% of Rs. 14,000) + Rs. 5,000
= Rs. 14,000 + Rs. 1540 + Rs. 5,000
= Rs. 20540

Save some tax by understanding Income clubbing provisions of Income tax

Additional Scenario

You have losses that you need to carry forward. This applies irrespective of whether you have any net tax payable or not. If you do not file the income tax return for a year by the due date, a loss for that year can not be carried forward. The only exception to this rule is loss from house property– this loss can be carried forward even if the IT return is not filed in time. Thus, if you have a loss from any of the heads of income (except for the head “Income from house property”) and you file your income tax return late, you would not be able to carry forward your losses. Thus, you would lose the benefit of set off of these losses against the income of the next year.

Conclusion

Not filing a return on time does have financial implications, especially if you have a net income tax payable and/or if you have losses to be carried forward. This can really hurt especially if the losses to be carried forward are significant. Therefore, your best option is to ensure that you file the income tax return by the deadline.”Better late than never” is the best policy when it comes to income tax return filing.

Notes from Manish:

Disadvantages of filing a late return

As per Income Tax Department of India : “Aa tax return may be furnished any time before the expiry of two years from the end of the financial year in which the income was earned’. This means that if you earned your income during FY 2009-10, you may file a belated return anytime before 31st March, 2012 ” . But there are some disadvantages if you dont file your returns on time .   They are

  • You will not be able to carry forward your Business loss (Speculation or otherwise) , capital loss , loss due to owning and maintaining of race horses.
  • Loss of Interest on refund : You may loose interest on refund u/s 244A specially in case if you are claiming a Major amount as refund.
  • You cannot revise your return.

NOTE: Dear Friends, the above article does not mean to encourage people for filing late return but only to make taxpayers aware about the provision of IT act and help them taking informed decision.

This is a guest article written by Mr. Rishabh Parakh who is a Chartered Accountant and Director at  Money Plant Consulting 

507 CommentsAdd Comment

  1. Kumar

    Dear Sir,
    I have registered a proprietor firm in 2008, but business was not good so i left the business and seeked a job abroad and didnt close the company. I was paying nil return every year (initially it was 6 months period but later yearly) My question is how long I can keep my company alive by filing nil return..? and what is the nil return filing charges, because i am using a firm for this purpose and they are charging me Rs 9000/- per year.. can I file nil return myself? what are the formalities?

  2. Parveen

    Dear Sir,

    I have File Asseesse Income Tax Return Assessment Year 2010-11 on 15/06/2012 in section 142(2) without received any notice. Can I aspect my refund. If yes then tell me in which section or not

    • Hi Parveen

      Your cases is a bit complex and I think we are not the right people to comment on it.

      My suggestion would be hire someone who is professional in this area and consult them

      Manish

  3. Umar

    Hi Manish
    My friend joined as a Medical Officer in JIPMER in late January. He was paid salary in February and March. He got salary after TDS.

    I have read from some of the previous comments and came to an assumption that if the salary is below the limit (<2,50,000) no tax is payable for that year.

    In my friend's case, he got around 62,000 after tax deduction for the two months. His monthly salary is 30,000. I guess he should file ITR by July 31.

    Questions:
    1. Is my assumption correct?
    2. After filing the returns, how much refund will he get? There are no other deductions and no other income source.

  4. gopalan

    Dear Manish,
    I want to file my return for AY 2015-16. IT website does not shoe AY 2015-16. As I am going out of country for six months , can I file it some time in DEC 2015 without penalty. I have no tax liability as a salaried individual.
    Gopalan

  5. Imran

    Dear Manish,
    Thanks for all your guidance.
    Iam a Engineer hence not concern to the account related things, since i had not filed the IT return yet. Since I am a salaried person, and having single Form 16 received from the company. Can I filed now my IT return for the last 3 Yrs Example 2011-2012, 2012-2013, 2013-2014 Last which earned years IT return can be filed with the help of Form 16?
    Your guidance will help a lot.

  6. Vijender

    Hi Manish,

    I have not filled income tax return for year 2009-2010, 2010-2011, 2011-2012.

    I was under impression that filling a income tax return is optional and missed for these years. Now I have received a notice from income tax department asking for the reason for not filling the income tax return.

    All the taxes are paid for these years, only the return is not filled.

    I want your help in fixing this issue

    Can i do it with late fee?

  7. DR PRASHANT

    Hello Expert
    I am a Govt Employee and my tax gets deducted at source every month. Due to unavoidable circumstances i couldnt file ITR for FY 2012-13 AND 2013-14. M loosing good amount of refund for FY 2012-2013. PLEASE GUIDE ME.

Leave a Comment