Income tax return after 31st July, 2013 pros cons

Lot of people misses the deadline every year due to lack of time or plain laziness. Didyou miss it too? In case you have, do not worry, you can still file the belated return. Asa taxpayer, you are likely to fall under one of these 4 categories. The associated rulesand implications are outlined below.

Case 1: No pending Tax LiabilityCases where all the taxes have been paid through TDS or advance tax and you don’towe any more to the tax department. This is the safest situation. The Income Taxreturn for any assessment year can be filed till the end of that assessment year withoutany penalty. If it is filed after the end of the assessment year, there is a lump sumpenalty of Rs. 5,000.For Example, for the current assessment year 2013-14, the deadline for filing the returnis 31st July, 2013. If you missed the deadline, then you can file the belated return tillMarch 31st 2014 without any penalty. However, if the return is filed after March31st2014, then you will be subject to a penalty of Rs. 5,000, which is dependent uponthe discretion of the assessing officer. It has been noticed that the fine is usually notlevied for online return filing.

Case 2: Tax Liability ExistsThis is the case where you still owe taxes to the Govt. It can happen due to manyreasons. For example: If you have income from other sources, you have worked in morethan 1 company, etc. In such cases, the basic rule remains same, i.e. the Income Taxreturn for any assessment year can be filed till the end of that assessment year withoutany penalty. You will be liable to pay a penalty of 1% interest on thebalance tax payable.

Let us understand this case with an example:

Mr. A’s Tax Liability (Net Tax Payable) be Rs.70,000

TDS deducted by employer Rs. 55,000

Advance/Self-Assessment tax paid be Rs.8,000

Balance Tax payable by Mr. A is Rs. 7,000 (70,000 – 55,000 – 8,000)

Suppose Mr. A files the return before the end of the assessment year (i.e. Before March31st, 2014). In this case if Mr. A would be filing the return 3 months late, Tax Payablewould be 7,210 {7,000+3 %( 7,000)}Suppose Mr. A files the return after the end of the assessment year on July 18,2014 (i.e. after March 31st, 2014). In this case, he will liable to a penalty of Rs. 5000along with the penalty of 1% on balance tax payable for 12 months (August, 2012 toJuly, 2013).Tax Payable is 12,840 {7,000+(12%(7,000)+5,000}

These rules come under section 234 and there can be multiple components of theinterest depending on the actual dates of payment of advance taxes.

Case 3: You have a Tax RefundIf you have any Tax refund and you can file the return even after 31st July without anyissue. The only disadvantage will be that your return may be processed late which maydelay the refund process.

Case 4: You have carry forward lossesIrrespective of the fact whether you have tax liability or not, if you do file your income taxreturn by deadline (i.e. July 31st) then you cannot carry forward the loss of that year.Thus you would lose the benefit of set off of these losses against the income of nextyear. However, there is an exception to this rule i.e. this rule doesn’t apply to loss fromhouse property, which means this loss can be carried forward even if the income taxreturn is filed after the deadline.

Important points

· Belated return (Return filed after the due date) cannot be revised· Some of the Deductions u/s 80 is not available for late returnConclusion:Filing a return on time is always a good habit which will keep you away from taximplications especially when you have Tax Liability, Carry Forward Lossesand Tax Refund etc. However, if you have missed filing the return, go ahead and fileyour return now right away.

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