While the I-T
department allows taxpayers to file belated returns, assessees need to be aware
of a few limitations in doing so.
Limitations
If any error is found in the return filed for assessment year 2013-14, these can be revised only up to March 31, 2015. It is advisable to take the help of a chartered accountant or tax return preparer to file late returns. Don't forget to include income from bank fixed deposits, income from royalty, winnings from lotteries and any sum or gift exceeding Rs 50,000 received from a non-relative, which is not on the occasion of marriage or under a will or inheritance.
If any error is found in the return filed for assessment year 2013-14, these can be revised only up to March 31, 2015. It is advisable to take the help of a chartered accountant or tax return preparer to file late returns. Don't forget to include income from bank fixed deposits, income from royalty, winnings from lotteries and any sum or gift exceeding Rs 50,000 received from a non-relative, which is not on the occasion of marriage or under a will or inheritance.
"Once a belated
return is filed by an individual, this is final and cannot be amended in the
future. So, one needs to be absolutely certain on the income being disclosed,
deductions/exemptions being claimed and tax credits/reliefs being
claimed,"said Parizad Sirwalla, national head, global mobility services,
KPMG.
Taxpayers should
avoid some common mistakes while filing belated returns. This could be offering
bank or fixed deposit interest on an estimated basis instead of the actual
basis or not matching Tax Deducted at Source (TDS) credits claimed in the
return of income with that reflected in Form 26AS. Or forget to club income of
a minor child or spouse from assets transferred by the transferor spouse.
Those who haven't
filed returns for either assessment year 2014-15 or 2013-14 can't carry forward
their capital losses to the next year. Usually, capital losses can be carried
forward for eight assessment years and set off against capital gains.
Short-term loss may be adjusted either against short-term gains or taxable
long-term gains, while long-term loss can be adjusted against taxable long-term
gains. Assume you had made losses of Rs 10,000 on sale of stocks in assessment
year 2014-15. In normal circumstances, you would have been allowed to carry
forward the capital losses, either short-term or long-term in nature, till
assessment year 2022-23. This won't be allowed now, since you'd missed the July
31 deadline for filing returns.
Those who file
belated returns may also be denied refunds. "If refund of any income tax
is due to the tax payer, the revenue authority may deny the interest for the
period of delay," said Mayur Shah, executive director, tax &
regulatory services, EY. Refunds for those filing returns before the due date
take at least six months to reach the assessee, according to experts.
Penalties, charges
A penalty of Rs 5,000 may have to be paid by those who haven't filed returns for assessment year 2013-14. However, the choice of levying this is with the assessing officer.
A penalty of Rs 5,000 may have to be paid by those who haven't filed returns for assessment year 2013-14. However, the choice of levying this is with the assessing officer.
If there are taxes
payable, interest is payable on the tax liability at the rate of one per cent
per month up to the date of payment of such taxes. However, no interest is
payable if no tax is due. For most salaried employees, the tax due would be nil
or negligible because employers would have deducted the applicable tax by way
of TDS.
Advance taxes
For individual tax payers, advance tax is due in case the tax liability is more than Rs 10,000 after accounting for TDS. Additional interest will have to be paid if the deadlines for advance tax (of 30 per cent by September 15, of 60 per cent by December 15 and 100 per cent by March 15) have not been met. The interest charged will be one per cent per month for three months after the first deadline and another one per cent on the cumulative tax due for three months after the second deadline. If you miss the March 15 deadline, you have to pay one per cent interest on the entire defaulted amount for every month until the tax is fully paid.
For individual tax payers, advance tax is due in case the tax liability is more than Rs 10,000 after accounting for TDS. Additional interest will have to be paid if the deadlines for advance tax (of 30 per cent by September 15, of 60 per cent by December 15 and 100 per cent by March 15) have not been met. The interest charged will be one per cent per month for three months after the first deadline and another one per cent on the cumulative tax due for three months after the second deadline. If you miss the March 15 deadline, you have to pay one per cent interest on the entire defaulted amount for every month until the tax is fully paid.
Section 276CC
Not filing tax returns on time can land you in jail. This can happen if the I-T authorities feel the assessee wilfully failed to furnish returns on time and the tax due is more than Rs 3,000. Under section 276CC of the I-T Act, if the amount of tax exceeds Rs 25 lakh, the assessee can be sentenced to rigorous imprisonment for anywhere between six months to seven years, and fined. In other cases, imprisonment can be between three months and three years, with fine.
Not filing tax returns on time can land you in jail. This can happen if the I-T authorities feel the assessee wilfully failed to furnish returns on time and the tax due is more than Rs 3,000. Under section 276CC of the I-T Act, if the amount of tax exceeds Rs 25 lakh, the assessee can be sentenced to rigorous imprisonment for anywhere between six months to seven years, and fined. In other cases, imprisonment can be between three months and three years, with fine.
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