Benefits of Filing your Income Tax Return on time

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Under
Income Tax Act if your total income exceeds the basic exemption limit: You have
to file the Income Tax Return within the prescribed time, i.e. by the due date.

The
due dates of filing returns for Assessment Year 2015-16 are the following:
Category
Due
Date
(a)   Most
people fall in this category –
Salaried
employees, pensioners and other persons whose accounts are not required to be
audited
31st August
2015 (Extended Date)
(b)   Companies
and other persons whose accounts are to be audited
30th September
2015  
What happens if a person does not file the Income Tax
Return by the due date?
You
have to Pay Interest on Income Tax Due if you don’t file on time
If
you do not file the Income Tax Return by the due date:
You
are liable to pay interest at the rate of one percent for every month after the
due date till the date of filing the return.
If
No Tax is due: Interest is calculated on the amount of tax payable after
adjustment of pre-paid taxes like advance tax, TDS etc. So, if there is no tax
payable on the basis of the Income declared in the Tax Return, there is no
liability for the payment of interest.
You don’t get the benefit of Carry Forward of Losses
if you don’t file on time
Under
income tax law, if you have sustained a Business loss or loss under the head
“Capital Gains”, 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 in time if
you want to carry forward the loss for future adjustment with your Income.
Possibility of Penalty or Prosecution by the Income
Tax Department
Say
you could not file the Income Tax Return by the due date: To avoid any penalty
by the Income Tax Department, you must file your Income Tax Return before the
end of the relevant assessment year that is 31st March 2016.
Possibility
of Penalty and Prosecution: If you do not file your Income Tax Return by 31st
March 2016, the Income Tax Department may impose a penalty of Rs. 5000, even
though the tax payable by you may be Zero.
Further,
if a person has failed to file the Income Tax Return by 31st March 2016 and the
tax payable after adjustment of advance tax and TDS exceeds Rs. 3000, he may be
prosecuted for imprisonment also. However, this law is used in practice very
rarely.
Other reasons for filing the returns of income within
time
  • If
    a refund is due after adjustment of prepaid taxes, it is necessary to file the
    Income Tax Return to get the refund from the Income Tax Department.
  • Bank
    Loans: Further, the return is a declaration of your income and it will be
    extremely helpful when you are applying for a loan from bank. Before granting
    the loan, banks want to know your financial capacity and your income details as
    shown by you in income tax returns.  
  • Visas
    of foreign countries: Many countries want to know if you are financially sound
    before they issue you a visa and for this purpose they will rely on your income
    tax returns.
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