The due date for filing income tax return in India for financial year (FY) 2018-19 was 31 August for most individual taxpayers whose taxable income is more than the basic exemption limit, or who being ordinarily residents in India own foreign assets. For individuals who are partners of a firm or are subject to tax audit, the due date is 31 October, 2019.
Even after one’s best effort, it’s possible that some taxpayers are unable to meet the tax filing deadline or having filed the tax return realizes that there was a mistake in the same. There’s no cause for worry, as there is still scope to make amends. The income tax laws allow taxpayers to file a belated tax return and also an option to revise the original or the belated return.
Belated tax return
In case you did not get a chance to file your return within the prescribed due date, you can file your tax return as a belated return. A belated return can be filed before the end of one year from the end of the relevant financial year in question or before the completion of assessment proceedings, whichever is earlier. In simple terms, a belated return for FY2018-19 (ie. period from 1 April 2018 to 31 March 2019) can be filed till 31 March 2020, provided the tax officer does not complete your assessment proceedings by then. It is therefore recommended to file the tax return at the earliest.
As it is said that there is no gain without pain, so is the case with the belated filing of tax returns. It is important for taxpayers to be aware of the following consequences of filing a tax return after the due date:
Late filing fee: With effect from FY2017-18, the government has introduced a late filing fee to encourage taxpayers to file their return within the due date. This fee is to be paid at the time of or before filing the belated tax return. A fee of `5,000 is applicable in case the belated return is filed before 31 December 2019. For tax returns filed between 1 January 2020 and 31 March 2020, the late filing fee applicable would be `10,000. However, in cases where the total income for the FY does not exceed `5 lakh, the late filing fee is restricted to `1,000.
Restriction on carry forward of losses: Certain losses are not allowed to be carried forward to subsequent years for a set off, if the tax return is not filed within the due date. Hence, in case you have incurred a loss under the head ‘Profits and Gains of Business and Profession’, ‘Income from Capital Gains’ or ‘Income from Other Sources’ (from the activity of owning and maintaining race horses), they will not be allowed to be carried forward. However, if there is a loss under the head ‘Income from House Property’, the same is allowed to be carried forward, even in the case of a belated tax return.
Additional interest on tax liability: In those cases where a tax liability is still payable, the taxpayers will be required to deposit additional interest @ 1% per month of delay for the outstanding tax liability. Even part of a month is considered as an entire month for the purpose of interest calculation.
Revised tax return
There may arise a scenario where a return is filed within the due date; however, a mistake was made in the return either in the calculation of income or in disclosure of certain information. It is also possible that some information was not available at the time of filing return and accordingly, income has not been offered correctly or some disclosures have been inadvertently missed out. In these scenarios, you have a chance to rectify the error(s) by filing a revised return.
Every taxpayer who has furnished their tax return within the due date can file a revised return. Even those who have filed a belated return are allowed to revise such returns.
The due date for filing a revised return is same as the due date for filing a belated return i.e., before the end of one year from the end of the relevant financial year in question or before the completion of assessment proceedings, whichever is earlier.
Accordingly, a revised return for FY2018-19 can also be filed till 31 March 2020, with the same condition that the tax officer does not complete your assessment proceedings by then.
Further, there is no limit to the number of times you may revise your returns. In case you find an error or omission in your revised return, you may file another revised return to correctly report all income and other prescribed information. However, abundant care and caution should be exercised in revising the return and, practically, there should be good grounds to support multiple revisions, in case any information is sought by the tax authorities in this regard.
The process of filing a belated return and a revised return is almost the same as that for the original return.
Nilpa Keval Gosrani and Mihir Vahi contributed to this article.
Vikas Vasal is national leader of tax at Grant Thornton India LLP. You can send your queries to firstname.lastname@example.org