If you haven't filled your Income Tax Return, then this is for you

Many people fail to file their ITR within the due date as prescribed by the income tax department. But even if you have missed the deadline of filing return, you can still file your income tax return. There is a provision in income tax for late filing of income tax return which is called belated return.

What is belated return?

Filing Income tax return after the due date is called belated return. It can be filed before the end of the assessment year. (This period has been changed in Budget 2016.Before Budget 2016, belated return can be filed within one year from end of relevant assessment year)But this change will be applicable from Assessment year 2017-18 and subsequent years.It means if you want to file the return for F.Y 2014-15, the relevant assessment year is 2015-16 and so return can be filed till 31st March 2017 and likewise if you want to file the return for F.Y 2015-16 ,the relevant assessment year is 2016-17 and so return can be filed till 31st march 2018.But if you want to file the return for F.Y 2016-17, the relevant assessment year is 2017-18 and so return can be filed till 31st march 2018 only.

There is NO PENALTY for late filling of ITR for FY 16-17. But there are certain disadvantage of late filling, like:-

1. Loss in interest on refunds :- 

In case you claim a refund in your return, of any advance tax paid/TDS, you would lose some of the interest paid by the tax department on such refund. The interest on refund is normally computed from April 1 of the assessment year (the year immediately following the financial year for which the return is filed) till the date of grant of refund.However, in case of a belated return (i.e. return filed after due date) interest is computed from the actual date of filing the return till the date when refund is granted. This means loss of the interest that would have been paid for the period April 1 till date of filing the return. Even if you file the return one day after the due date you would be losing interest for at least four months - April, May, June and July (presuming due date is not extended beyond July 31).

2. No carry forward of losses :- 

If you file a belated return you cannot carry forward losses (other then house property loss). "Losses under the following heads of income: Income from business and profession including speculation business, capital gains, and income from other sources cannot be carried forward in case a belated return is filed by the tax payer. The return filer will not be allowed to carry forward these losses even if all taxes have been paid in time if the return is belated".

3. Penalty and Interest :-

If there are any taxes which are unpaid, penal interest @ 1% per month or part thereof will be charged till the date of payment of taxes .Also Penalty of Rs 5,000 may be charged. The penalty is not levied in all cases and depends upon the circumstances of the case.

For returns of FY 2017-18 and onwards, penalty of Rs 5,000 will be charged for returns filed after due date but before 31st December. If returns are filed after 31st December, a penalty of Rs 10,000 shall apply. However, penalty will be Rs 1,000 for those with income upto Rs 5Lakhs.

Conclusion

One must pay taxes and file the return on or before the due date. And in case one is unable to file the return, at least taxes if any should be paid within due date. If all taxes are paid, penal interest will not be levied. However other drawbacks such as non carry forward of losses will be applicable.