Not Yet Filed Your Income-Tax Returns? Read This!
Paying taxes and filing returns are something that all of us have to comply with. It is not only our legal responsibility but should also be viewed as a moral responsibility. By paying taxes on time, you contribute to the development of our country. Also, Income-Tax (I-T) returns validate your credit worthiness before financial institutions and help you in accessing many financial benefits such as bank loans and much more.
Missing the deadline for filing I-T returns can give you sleepless nights. So here are some vital points you must take cognisance of as an individual assessee if you have not yet filed your returns and / or paid your taxes.
PersonalFN is of the view that you must always file your I-T returns on time and make sure that you pay your taxes before the due date. This will not only provide you with several benefits, but also save you from the interests and penalties that can arise later. If you have not done either of the things then you must consult your tax consultant and do so immediately.
- Non filing of returns
If you have not filed income-tax returns by July 31, for the last financial year you can still do so by the end of this month, i.e. March 31, without paying any penalties. As per Section 139(4) of the Income-Tax Act, 1961, one is allowed to file his / her I-T returns until 1 year of the completion of the relevant assessment year or before the completion of the assessment, whichever is earlier. Hence, filing of returns can be done even after March 31, but it must be borne in mind that in this case, a penalty of Rs 5,000 may be imposed upon you. This decision is taken by the assessing officer who has the right to waive off this penalty.
- Non-payment of tax due
If you have not paid income-tax on time, then a penal interest of 1% per month (simple interest) will be levied on the amount of tax due.
- Non-payment of advance tax
If the amount of tax that you would be eligible to pay exceeds Rs 10,000, then advance tax needs to be paid in 3 instalments. The first due date is September 15, where you are required to pay at least 30% of the tax payable as advance tax. The second due date is December 15, where at least 60% needs to be paid and on the last due date i.e. March 15, 100% of the tax payable needs to be paid. If you defer any of these payments, then simple interest of 1% per month would be levied as penalty.
- Not allowed to make any amendments
If you have not filed your returns on or before July 31, you would not be allowed to make any changes in case if you make any errors while filing your returns later. However, if you have filed your returns by the aforementioned deadline, then you have a chance to correct any errors and make changes in your tax form any number of times before March 31 or till the time your returns are assessed, whichever is earlier.
- Not allowed to carry forward losses
Likewise, if you haven't filed your returns on or before July 31, you are precluded from carrying forward losses. But in case if you have filed your returns well on time, you are allowed to carry forward your losses for the next 8 years and adjust it with gains that you may make in the future.
PersonalFN believes that tax planning as an exercise is not just limited to filing returns and paying taxes. It is a process whereby your larger financial plan should be taken into consideration after accounting for your age, financial goals, ability to take risk and investment horizon (including nearness to financial goals). And by adopting such a method of tax planning, you not only ensure long-term wealth creation but also meeting your important financial goals. Thus, tax planning should never be left for the last moment as that would not help you in a big way and would sabotage the essence of holistic tax planning.
PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.
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