New Delhi: Income Tax Returns (ITR) for 2016-17 (assessment year 2017-18) were originally to be filed by 31 July, however the deadline was extended to 5 August.
But now that Income tax department has extended the deadline for filing ITRs, you must not take a laid-back approach as procrastinating your tax return can create several problems for you.
Chetan Chandak, Head of Tax research, H&R Block India has shared his views with Reema Sharma of Zee Media and emphasised on filing ITR before the due date.
Here is why you should file income tax returns within due date.
Interest on refunds
When you claim a refund in your tax return, it generallytakes anywhere between 2-6 months to actually get the refund. The government compensates for this delay in issuing the refund by paying interest @ 6% p.a. on the refund due.
If you file your return on time, refund is calculated from April 1 of the assessment year. However, in case of a belated return, the interest is calculated from the actual date of filing the return. So, to avoid losing this potential income, you must file your return on time.
Save tax by carrying forward your losses
I-T laws allow taxpayers to carry forward their losses under various heads of income like income from business and profession including speculation business, capital gains, house property and income from other sources.
However, if you file a belated return, you cannot carry forward your losses. The only exception to this rule is loss from house property.
Avoid paying penal interest on unpaid taxes
If you don’t file your income tax return on time when you have outstanding tax liability, the I-T department can penalise you by charging interest under section 234A.You will be charged interest @1% on the taxes due.
It is calculated from the due date of filing the return till the date of actual filing of the return. Hence it is important to pay your taxes as well as file your return on time.
If you delay your taxes even further and do not file it before the end of relevant assessment year, you empower the assessing officer to levy a penalty of Rs 5,000 on you.
Even if you have no taxes due, taxman can impose this penalty if you cannot show a valid cause for delay in filing taxes. From the next assessment year, penal provisions will become more stringent as a new late filing fee of Rs 5,000 will be applicable on late filers who miss the July 31st due date.
Late filing fees of Rs 10,000 will be imposed on you if you don’t file your taxes by 31st December.