Given that the deadline to issue Form 16 was extended till 10 July, the last date for filing income tax return (ITR) for FY18-19 may get extended well beyond 31 July. But that shouldn’t become a reason for you to leave tax filing for the last moment, especially if you already have all the required documents. Remember that if you fail to file your ITR by the due date, you will have to pay a penalty and face certain restrictions when you file belated return.
If you fail to file the tax return within the stipulated due date, you can still file a belated return any time during the current assessment year (AY) 2019-20. So if you fail to file returns for the current AY 2019-20 in time, you can file a belated return till 31 March 2019 or before the completion of assessment by the income tax department, whichever is earlier.
However, you will have to pay penalty (late fee) at the time of filing returns. The penalty is ₹5,000 if you file your return after the due date but before 31 December of the AY, and ₹10,000 if you file it between 1 January and 31 March. However, the penalty is limited to ₹1,000 for those who have an income below ₹5 lakh.
The penalty along with the due tax needs to be paid before you submit your belated ITR. Remember that you can’t escape paying penalty on belated return, irrespective of whether any tax is due or not.
Besides paying penalty, you are also supposed to pay interest on due taxes each month until you file your ITR. You will also not be allowed to carry forward certain losses to subsequent years for set-off. For instance, capital loss and loss under income head house property can be carried forward for the next eight AYs and can be adjusted against gains during these years, but only if the return is filed by the due date.
If any tax refund is due to you and you file the ITR within the stipulated time, you can earn interest on the refund claim. A refund is claimed when excess tax paid on your income during the year as per Section 244A of the Income-tax Act, 1961. However, in case of belated returns, you may lose the interest that would be due on the refund amount.
Remember that if you fail to file your ITR at all, the tax department can send you a notice and it can even lead to prosecution. There are provisions of jail term from three months to two years if you fail to file your ITR. Also, if the due tax is more than ₹25 lakh, the jail term can be up to seven years.
It certainly makes sense to file your return before the due date, ideally well in advance to avoid the last-minute rush and glitches.
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