Why you should not miss the due date of filing income tax return of 31st July
31st July is the due date of filing income tax return for the majority of the taxpayers & is just weeks away. One of the most common questions is whether it is mandatory to file the income tax within the due date? What if the return is filed after 31st July?
It may be noted that return can be filed belatedly even after 31st July till 31st December whereas Updated Return can be filed within 2 years from the end of the relevant assessment year. However, Belated or Updated returns are certainly not at par with the income tax filed on or before the due date of 31st July. Late filings of ITR have costs & consequences not only in terms of monetary penalty & fine but also in terms of denial of various benefits & incentives. Let us know about it.
Duty to file Income Tax Return:
Under the Income Tax Act-1961, every person whose income exceeds the Basic Exemption Limit (BEL) is mandatorily required to file the ITR. The obligation to file ITR is linked with income & not with final tax liability. Even if the TDS is done by the payer, it doesn’t absolve the recipient from the obligation to file the ITR. Similarly, Companies & firms have to file the return of income even if there is no business during the year or they have no tax liability or even if the firm or company is incorporated on the last day of the financial year.
Further, the liability to file the ITR arises if the income before claiming deduction under Chapter VIA (which includes deduction u/s 80C towards LIC/PPF/NSC/ELSS etc, U/s 80D towards mediclaim payment, U/s 80CCD(1B) towards NPS) etc exceeds the BEL. Any person having any beneficial ownership or any assets or signing authority in any account located outside India are mandatorily required to file ITR irrespective of BEL. Even though the return filing is possible after the due date with some late fee, still it is advisable to file it within the due date. There are various advantages if the return of income or audit report thereto is filed within due date, as under:
No Late Fee:
a) If the return is not filed within the due date then late fee of Rs. 5,000/- would be applicable. However, if the total income doesn’t exceed Rs. 5 Lakh then the late fee of Rs. 1,000/- would be applicable & not Rs. 5,000/-.
b) Taxpayers must note that now ITR cannot be filed after 31st December as the belated returns are permitted to be filed till December only. [Only option after December could be to file an “Updated Return” which will carry additional tax impact].
Advantage of Loss Carry forward of Loss:
If taxpayers have incurred a loss during any year, they are allowed to carry forward such loss for set off against subsequent years income. However, this benefit of loss carry forward is available only if ITR is filed within the due date. If the ITR is filed after the due date then the benefit to carry forward the loss is lost.
Interest U/s 234A:
Any delay in filing of the ITR, beyond the due date, attracts an additional interest at the rate of 1% for every month, or part of a month during the period of delay on the amount of tax remaining unpaid. So, by filing income tax returns a person can avoid interest liability as well.
Earlier issuance of Income Tax Refund & Benefit of Interest on such refund:
It’s only after filing of the ITR that the return can be processed by the department. Early filing of income tax returns results in earlier issuance of income tax refunds, if any. Taxpayers may note the stark difference as far as interest on income tax refund is concerned. If the income tax return is filed within the due date & refund arises pursuant to excess TDS/TCS/ Advance tax then interest is to be calculated w.e.f. 1st April of the relevant assessment year. However, if it is filed belatedly then the interest is payable from the date of filing the income tax return to the date of granting of refund.
What is the Due date of filing Income Tax Return of Trust, Societies & Other Institutions:
The due date of filing income tax return shall be 31st October in case of any person whose accounts are required to be audited under the Income Tax Act or under any other law for the time being in force. The charitable trust/societies etc are required to get their books of accounts audited under the relevant law and so in such a case, the due date shall be 31st October and not 31st July.
Conclusion:
Though the taxpayers can file a belated or updated return, still it is advisable to limit the filing within the due date. Filing the income tax return after the due date may be detrimental as it could result in additional cost and denial of few benefits. Starting early is the mantra for avoiding not only the error and omission in the income tax return but also in filing it belatedly.
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