It is often observed that people are bit lazier and ignorant, when it comes to filing of their return of income and the same is due to no. of reasons such as:
- Busy work schedule
- Time taken in compilation of data from different sources; like Form 16 from the Employer, Investment Details from the Investment Adviser, Bank Statements from the Bank etc.
- Assumption that Tax has already been paid and so what’s the rush?
- Tax Filing coming into least priority tasks amongst many other pending tasks
- Lack of awareness about consequences of belated filing
Some people tend to believe that no matter how late they will wake up, their C.A will accommodate them, the way he always does. However, trust me friends, your C.A being a professional fellow knows the pitfalls of late filing and hence would always go out of the way to ensure that all his clients meet the statutory deadline. But after all he too is a human being and is dependent upon other human beings in his office and all of them are at the mercy of Income Tax Portal, which has its own mood swings, tantrums and whims. At times circumstances can go against him and you, and it is possible that despite of burning mid night oil and slogging out by your CA till last minute, for one reason or the other, your return goes beyond the statutory deadline.
Many people would feel as to what’s the big deal; if once in a while return has been filed belatedly. However, there are some inherent dis-advantages and at time serious consequences of late filing, one needs to be aware of and the same are listed below:
1. Loss of Interest on Refunds:
If you are eligible for any tax refund, you will lose out on interest for the period of delay, as interest on refunds is calculated only from the date of filing the return in case of belated returns. On the other hand, in case of regular returns, interest is eligible from 1st April of the year in which the return is filed and is worked out till the date of payment of refund amount.
2. Late Filing Fees:
A late filing fee is imposed under Section 234F, typically ₹5,000, if filed before December 31. However, if your taxable income does not exceed ₹5 Lakh, the late fee is limited to ₹1,000.
3. Interest on Unpaid Tax:
If you have any outstanding tax liability, interest is charged under Sections 234A, 234B, and 234C. Section 234A specifically levies simple interest at 1% per month or part thereof on the unpaid tax from the due date until the date of actual payment.
4. Carry Forward of Losses not allowed:
This is a more severe one. You cannot carry forward losses to the subsequent years. This includes Losses from Business, Profession, Capital Gains etc.
5. Disallowed Deductions/Exemptions:
Certain tax-saving deductions or exemptions under Chapter VI-A or specific sections (such as 80-IA, 80-IB) may be disallowed if the return is filed late.
6. Error or Omissions in reporting nos.
At times just in order to meet the statutory deadline many people (who woke up from their slumber at the very last minute) push their C.A to ensure that filing is done in time. However, they do not realize that now a days some of the return forms (like ITR-3, ITR-6 etc.) runs into 80-100 pages and ask plethora of information. One single mistake in reporting nos., mis-reporting or omission can haunt the client and their CAs for years to come.
7. Risk of Notices and Prosecution
Continuous delay or non-compliance can lead to notices from the tax department and, in serious cases, prosecution under the Income Tax Act, depending on the nature and amount of tax-evasion.
8. Loss of Tax Refund Claim Forever
If there is excess TDS deduction resulting into tax refund and return could not be filed till 31st December for some reason, the refund claim would be lost forever.
The return can be filed belatedly till 31st of December. Thereafter only updated return can be filed BUT in addition to REGULAR Tax, Interest and Penalty one is also required to pay additional tax ranging from 25% to 70%, depending upon no. of years of late filing. Mind you; this is worked out over and above your normal liability towards tax and interest:
| Filing of return after end of the year | Additional Tax |
| Within 12 months | 25% additional tax |
| Between 12–24 months | 50% additional tax |
| Between 24–36 months | 60% additional tax |
| Between 36–48 months | 70% additional tax |
Updated return can only be filed if there is some tax and interest due on your return and it cannot be filed if there is a loss or refund or reduction in the tax liability.
So; friends late filing of return can have serious and at times disastrous consequences on your pocket and peace of mind. It is therefore strongly suggested; not to miss the statutory deadline of filing of tax returns. Please ensure that your C.A gets your details in time so as to allow him and his team adequate time to work on the data, so as to minimize possibility of commissioning of any error and omissions and ensuring tax compliance.
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