What happens if you miss the deadline to file tax returns?

What happens if you miss the deadline to file tax returns?

It’s the time when tax returns filing is a priority in every taxpayer’s mind. Individuals have salary income whose total income exceeds Five Lac are mandatory to file their income tax returns. Significant relief for e-filing for this category of taxpayers is no need to get a digital signature. One needs to file their taxes online and sign and send the verification form to the Central Processing Unit in Bangalore. deadline to file tax returns

Taxpayers earning less than Rs Five lakh a year from salary and having less than Rs 10,000 per annum as interest on deposits and bank accounts will be exempt from filing income tax returns. But there is a specific condition i.e., their employer has made the mandatory TDS payments to the government, and one has remained in the same job through the financial year. If one is liable to file taxes (even if not to pay them) and has not filed them in time, there is a penal interest of 1 percent per month charged; hence it is better to ensure early payment and filing of taxes.

But, one question comes to mind if one did not file their returns in time?

There are quite a few options for those who have not filed their returns on time or those who have not filed returns for the previous years. Ideally, it is possible to avoid paying any penalty to the government if one does not owe any taxes, as late filing (not late payment) does not incur any penal payments. One is permitted to file returns up to a maximum of 2 financial years from the year of the return, i.e., if the returns for 2010-11 are not filed, one has time till March 2013 to file the returns.

There are specific clauses attached to the delayed filing. Cannot carry Capital losses be carried forward unless they are filed in the tax returns before 31 July. Also, revised returns are not permitted, meaning any mistakes in the filing can be taken as a tax offense. The only capital loss permitted to be carried forward even though the late filing of returns is loss on sale of house/ property.

However, a discretionary penalty of Rs 5,000 if the tax return is filed more than one financial year after the assessment year. 

If the returns for 2010-11 are filed in 2012-13, then a fine of Rs 5,000 is applicable, but if the same returns are filed by 2011-12, there are no fines. This fine of Rs 5,000 is at the discretion of the assessing officer.

Other financial implications include the penal interest of 1 percent per month (calculated on a simple interest basis) levied on any tax that is due and not paid by the due date, in addition to the 1 percent per month interest on non-payment of advance tax (for the amount due after calculating TDS, amounting to over Rs 10,000).

For example, if an individual has a net tax payable of Rs 2,00,000 and has paid Rs 1,60,000 through TDS and Rs 30,000 as advance tax, the outstanding amount is Rs 10,000. For this outstanding amount of Rs 10,000, he will have to pay a penalty of Rs 100/- which is 1 percent of that amount for each month delayed beyond 31 July if the return is filed by 31 March 2014. Thus, if paid in October 2013, the net tax payable will be Rs 10,000 + 3 percent of Rs 10,000, which is Rs 10,300. However, suppose filed the same returns after 31 March 2014 in April 2014. In that case, there will be an additional penalty of Rs 5,000 (as applicable in the previous case), making the total amount payable as Rs 10,000 + Rs 5000 + 9% of Rs 10,000, which is Rs 15,900. These provisions for late filing and additional penalty clauses are detailed in section 234 of the IT Act.

One can, however, claim for a tax refund even if the returns are filed late. But this will result in the refund being delayed, and receipt of the refund could take a very long time.

Apart from this, other practical aspects mandate that IT returns should be filed on time, such as requiring IT papers for bank accounts, visas, bank loans, etc. Hence, it is always advisable to ensure that one’s returns are filed well within time to avoid unnecessary hassles and penalty payments.


• There are options for those who haven’t filed their returns on time. The IT department gives up to two financial years as a grace period (the second financial year carrying a Rs 5,000 fine).

• An interest of 1 percent per month (calculated on a simple interest basis) levied on any tax that is due and not paid by the due date.

• cannot carry capital losses unless they are filed in the tax returns before 31 July.

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