01/09/2015

Missing the Aug 31 deadline for filing taxes? Things you should know

Summary What to do if Deadline missing for filing Income Tax Return
August 31 is the last date for filing returns. If for any reason you miss this deadline, you can still file returns by the following March 31. Belated returns can be filed on or before two years from the end of the relevant tax year. 

So, even those who missed filing their returns for income earned in FY14-15 or assessment year 2015-16 can do so by March 31, 2017. However, no belated returns can be filed for years prior to assessment year 2014-15.
 
While the I-T department allows taxpayers to file belated returns, assesses need to be aware of a few limitations in doing so. 
Limitations
If any error is found in the return filed for assessment year 2015-16, these can be revised only up to March 31, 2017. It is advisable to take the help of a chartered accountant or tax return preparer to file late returns.
Once a belated return is filed by an individual, this is final and cannot be amended in the future. So, one needs to be absolutely certain on the income being disclosed, deductions/exemptions being claimed and tax credits/reliefs being claimed. 
Common Mistakes to Avoid
Those who haven't filed returns for either assessment year 2015-16 or 2014-15 can't carry forward their capital losses to the next year. Usually, capital losses can be carried forward for eight assessment years and set off against capital gains. Short-term loss may be adjusted either against short-term gains or taxable long-term gains, while long-term loss can be adjusted against taxable long-term gains.
Assume you had made losses of Rs 10,000 on sale of stocks in assessment year 2015-16. In normal circumstances, you would have been allowed to carry forward the capital losses, either short-term or long-term in nature, till assessment year 2023-24. This won't be allowed now, since you'd missed the August 31 deadline for filing returns.
Those who file belated returns may also be denied refunds. Refunds for those filing returns before the due date take at least six months to reach the assessee. 
Penalties, Charges
A penalty of Rs 5,000 may have to be paid by those who haven't filed returns for assessment year 2014-15. However, the choice of levying this is with the assessing officer. 
If there are taxes payable, interest is payable on the tax liability at the rate of 1% per month up to the date of payment of such taxes. However, no interest is payable if no tax is due. For most salaried employees, the tax due would be nil or negligible because employers would have deducted the applicable tax by way of TDS. 
Section 276CC
Not filing tax returns on time can land you in jail. This can happen if the I-T authorities feel the assessee wilfully failed to furnish returns on time and the tax due is more than Rs 3,000. Under section 276CC of the I-T Act, if the amount of tax exceeds Rs 25 lakh, the assessee can be sentenced to rigorous imprisonment for anywhere between six months to seven years, and fined. In other cases, imprisonment can be between three months and three years, with fine.
 

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