We are all aware that filing income tax returns is compulsory in India and there are several benefits attached with it as well. Be it easy processing of loans, VISA application, purchase of immovable property, peace of mind and so on.
Due dates for filing of ITRs are generally 31st July for individuals and 30th September for Companies. Still we delay the same and generally file our ITRs on 31st March of next year due to the fear that there will be a penalty of Rs. 5,000 for any delay beyond this date.
You are legally right if you have filed the return on 31st March of next year but you have lost several benefits which could have accrued to you had you filed your return on time:
1. Levy of Interest Penalty: The very first impact of not filing of ITR by due date is that a Penal Interest @ 1% gets attracted u/s 234A. This penal interest is charged on Tax Liability Payable, and is charged in addition to normal interest of section 234B of the Act. Hence, non-filing of an ITR, by Due Date, will lead to double interest i.e. one, a normal interest u/s 234B and two, a penalty interest for non-filing of ITR by Due Date.
2. No Carry forward of Losses : Under income tax act, if you have sustained a loss, you can carry forward the loss ONLY if you file the Income Tax Return by the due date. Therefore, if you have sustained a loss, you must file your Income Tax Return on time if you want to carry forward the loss for future adjustment with your Income.
3. ITR Cannot Be Revised: If someone does not file the ITR by due date and files the ITR late then he/she loses the option to revise the ITR. Hence if someone finds a mistake in ITR filed and has filed the ITR late then that mistake cannot be corrected, and the same may lead to lots of inconvenience & hassles.
4. Late ITR Late Refund: If ITR is filed with delay then the ITR will also get processed with delay and the same will lead to late processing of ITR in Refund cases. Hence, assessee will face delay in getting the refund back from the IT Deptt. Now that’s a lucrative incentive to file your return on time!
5. Possible Income Tax Notice: Through various sources IT Deptt is aware of assessees major financial transactions, property transactions, bank deposits, credit card transactions etc. Income tax department can issue you a notice asking you of the reason for not filing the return by the due date. In some cases it can lead to Income tax scrutiny notice as well.
6. Reminders from Income Tax Department: Now, the IT Deptt have full records of assesses. If an ITR is not filed by due date, IT Deptt starts sending communications via emails, sms etc. No one likes to receive reminders from Income Tax departments.
7. Prosecution: As per the new provisions of Income Tax Law, intentionally non-filing of ITR (by due date) can lead to initiating of prosecution provisions by the the Tax Authorities.
8. Importance of Tax Return: ITR is a very important legal document and is very helpful before various authorities and at various places e.g. for VISA purposes, Loan purposes etc. Even in various proceedings in the Income Tax Department, filing of ITR (by Due Date) provides lots of strengths to assessees representations.
It is also very important to understand that ITR should not only be filed by Due Date but should be filed well before Due Date so that last hours inconveniences can be avoided and benefits of early filing are gained.
CA. Ankush Garg
9999494470
M R Garg & Associates
Chartered Accountants
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