Despite the extension in due date for filing income tax return for the financial year 2016-17, many tax-payers failed to do their part, in what has become as predictable an annual ritual as the returns filing process itself. This year though, tax-payers’ woes were compounded by the malfunctioning of the official electronic returns filing website on crucial days, which paved the way for an extension from July 31 to August 5.
However, many have been unable to meet this deadline too, thanks to the chain of changes, confusion and clarifications that marked returns filing process this year – change in income tax return (ITR) forms, insistence on quoting Aadhaar and declaration of cash deposits between November 10 and December 31, among other things.
Such tax-payers can take heart and file their returns before March 31, 2018. Read on to understand the rules for filing a belated return as well as its consequences.
Respite for Late Comers
Tax-payers are allowed to file what is termed a belated return even after the due date – July 31, which was extended to August 5 this year – has elapsed. However, you need to complete this process by the end of the assessment year, which is March 31, 2018 in case of financial year (FY) 2016-17. Moreover, returns for the financial year 2015-16 can also be filed until this date, a leeway that will not be available for the next assessment year since the rules were modified last year. “Effective financial year 2016-17 (assessment year 2017-18), a belated return can be filed till the end of the relevant assessment year. Thus, time available for filing a belated income tax return for AY 2017-18, would be up to March 31, 2018 and not March 31, 2019,” says Suresh Surana, founder of tax advisory firm RSM Astute Consulting. Earlier, tax-payers were allowed to complete the process by the end of one year from the relevant assessment year.
Reconcile with the consequences
You will have to brace yourselves for the possibility of your pocket taking hit due to your procrastination. In case you owe tax, you will have to shell out simple interest at the rate of 1% per month on the amount due. “If the assessee has unpaid taxes and the return was not filed before the due date, interest under section 234A will be applicable. This interest will be calculated from the due date applicable to you for filing of return of the applicable year till the date that you actually file your return,” informs Amit Maheshwari, managing partner, Ashok Maheshwary & Associates.
On the other hand, if you are entitled to tax refunds, you will have to forgo the 6% interest that I-T department is required to pay. “I-T department will not pay any interest for a delay caused by you in claiming it. Even if you file the return a day after the due date, it will mean losing out on interest for four months (April to July),” points out Chetan Chandak, head, tax research, H&R Block. Not meeting the deadline will also deprive you of the benefit of carrying forward losses, which can reduce your tax liability. “Even if you have paid all your tax dues on time, you will not be given any opportunity to carry forward your losses if you miss the return filing due date. However, loss from house property is one of the important exception to this general law – it can be carried forward even if you file a belated return,” points out Chandak.
Late-filers, take note
Do not forget the critical step in the process this year – linking Aadhaar with PAN to bring it to its logical conclusion. While the revised due date for filing returns too has passed by, you have time till August 31 to complete the Aadhaar seeding. “Remember, the returns will not be processed until the linkage of Aadhaar with PAN is done and Aadhaar (or enrolment number) is mentioned by the residents in the forms,” cautions Surana.
Finally, if you noticed errors – a common occurrence given the tedious process – after you file your returns, do not panic. Unlike earlier, you can revise your return even if you have filed it after the due date. “Starting AY 2017-18, taxpayers are being allowed to revise belated returns too. You can do so if you find any discrepancy from your end,” advises Chandak.
