What to do if you failed to file your income tax return before the due date of filing?

The last date to file income tax return for the assessment year 17-18 was 31 July, 2017. However, the due date for filing the income tax return extended to 5th of August, 2017 by the government.

In fact, the income tax return filing within the deadline is very crucial especially for the Financial Year 2016-2017 in case you have deposited (cash deposit only) Rupees 2 lakhs or more in your bank account during the period between November 9, 2016, to December 30, 2016, i.e. the demonetization period.

This is because reporting of such cash deposits has been made compulsory by the IT department in all forms of Income Tax Returns for Financial Year 2016-2017. Furthermore, given the IT department’s clean money initiative you may receive a letter asking you to furnish your income tax return if not filed in time.

There are many people in India who fail to file their return of income within the specified due date of income tax return filing as prescribed by the income tax department. Though you have missed the deadline for income tax return filing, still you can file your IT return. As per the Income Tax Act, there is a provision by which an assessee can file his or her return even after the due date. In other words, there is a specific provision in Income Tax Act for late filing of IT return which is called belated return.

What is belated return?

Filing of IT return after the expiry of the due date is called belated return. However, the belated return can be filed before the end of the relevant assessment year.  Earlier, the time given to file the belated return was one year from the end of the relevant assessment year for which income tax return has filed.

But with Finance Budget 2016 the time for filing the belated return reduced to the end of the assessment year. For the Financial Year 2016-17, (for F.Y. 16-17, A.Y. is 17-18) the belated return can be filed up to 31st March 2018 only. You won’t be able to avail the previous benefit of additional one year.

Consequences of Late Filing of Return

It is always advisable that one should file his or her income tax return on or before the due date and should pay the due taxes in time otherwise it will have the following consequences:

♣ Penalty and Interest

If taxes are not paid within the specified time and remain unpaid, interest at 1 percent per month or part thereof will be charged as penal interest till the date of actual payment of taxes. In addition to this, a penalty of Rs 5,000 may be imposed. Generally, the penalty is not imposed in all cases but it depends on the circumstances of each case. Penalty Amount is been Changes with effect from A.Y. 2018-19 and same is as follows:-

Penalty for late filing of ITR after due date AY 2018-19:

In some of the extreme cases, where the individual do not furnish his/her income tax return intentionally within the stipulated time, a penalty under section 276CC could be levied by the assessing officer. As per this provision:

• Where the tax is less than INR 25 lakh – the assessing officer could penalise the taxpayer with imprisonment for a term of 3 months which could also extend upto 3 years
• Where the tax is more than INR 25 lakh – the assessing officer could penalise the taxpayer with imprisonment for a term of 6 months which could also extend upto 7 years

However, such penalties are a rare occurrence. In majority of the cases, the defaulters are required to pay interest at the rate of 1 percent for delay in depositing the income tax.

♣ No interest on Income Tax Refunds

In case there is a refund which is due to the taxpayer, the interest on that refund will not be paid to the taxpayer for the period relating to the delay in filling the return.

♣ No deduction u/s 80

Some of the deduction available under section 80 of the Income Tax Act, 1956 is not allowed in case of filling the return after the due date.

♣ Unable to set off Losses

Where any assessee has incurred losses (other than house property loss) will not be allowed to carry forward such losses to subsequent years for set off against the future incomes, if the assessee has failed to file his or her return on or before the due. 

Conclusion

One must file his or her return of income and pay the due taxes on or before the due date. And in case, where the one is unable to furnish his income tax return, at least taxes (if any) must be paid within due date. Where taxes are paid in full, there would be no levy of penal interest. However, other shortcomings such as no carry forward of losses, Penalty etc will be applicable. So Its always better and suggested to file your Income Tax Return in Time.