Most of us are in the habit of delaying things, especially when it comes to income tax. The fact that one needs to collect all relevant documents and do some serious number-crunching make some people delay filing Income Tax Return (ITR). From this year onwards, however, a lot has been changed and it could cost you a lot if you don’t file ITR on or before July 31 this year. Also Read - Income Tax Return: Belated ITR Can be Filed by March 31, 2019 By Paying Fine Upto Rs 10,000
Though the advice is to file the return on time, here is what happens if you miss the deadline. Also Read - Income Tax Return 2018: 8 More Days To File ITR; Tax Filing Tips For Salaried Class
If you don’t file ITR by July 31 then it is treated as a belated return, and you have a deadline for that. According to the Income Tax Act, for returns pertaining to any financial year the last date for late return would be the end of the relevant assessment year. For example: For FY 2017-18 (AY 2018-19), the last date would be 31 March 2019, and it would be your last opportunity for you to file the return. Also Read - Income Tax Refund Fraud by Chartered Accountants Can Land You in Trouble; 200 Per cent Penalty on Misreporting of Income
Earlier the time period for filing a belated return was two years but it has changed to one year.
You have to pay interest at the rate of 1 per cent per month till you file the return.
In case of a refund, the income tax department has to pay an simple interest at the rate of 0.5 per month per month for the period of delay. The period of delay is calculated from the first day of the assessment year till the date refund is received.
In case of a belated return, the time period for interest will get reduced and will be calculated from the day of filing the return till the date the refund is received. It means one day delay could cost you interest for the period of four months from April to July.
From this year onwards, there is a late fee of Rs 5,000 if the return is submitted after July 31, but on or before December 31, 2018. There will be a fee of Rs 10,000 if ITR is filed after December 31, 2018. For people earning less than Rs 5 lakh the penalty amount does not exceed Rs 1,000.
Carry Forward Losses
You won’t be able to carry forward your losses and set them off against income next year. The only exception is house property.
What if you don’t file it till March 31, 2019
In such a case you return will be considered as time-barred under the law. You need to convince income tax commissioner if a refund is due or you want to set off your losses.
Having said that, do file your income tax return on time and stay away from last minute procedural hassles.