File the income tax return within due date to avoid late fees

File the income tax return within due date to avoid late fees




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File the income tax return within due date to avoid late fees

The due date for filing the income tax return is 31st July for general categories of taxpayer. However, for taxpayers who are required to get their books of account audited under the provision of Income Tax Act u/s 44AB & for companies, the due date of filing the income tax return is 30th September.  For taxpayers who are required to furnish report u/s 92E relating international or specified domestic transactions, the due date is 30th November.

If the return is not filed within due date, Income Tax Act allows taxpayers to file it at any time within one year from the relevant financial year. For example, for salaried taxpayer, the due date for filing the income tax return for the recently ended FY 2017-18 is 31st July 2018. If the return is not filed by 31st July 2018, then taxpayer is allowed to file the belated return till 31st March 2019. Earlier, taxpayers was allowed a period of 2 years to file the belated return which is now restricted to one year only. If return is not filed within even such extended time period, there is no option at the end of the taxpayer to file such return subsequently.

There is one chronicle change proposed for filing the income tax return related to financial year 2017-18 & onwards. If the return of income is not filed within due date (i.e., before 31st July or 30th September as mentioned above) then late fee would be leviable, which is as under:

  1. For taxpayer with income exceeding Rs. 5 Lakh, Late fee would be as under:
    a] Rs. 5000/- if return is filed by 31st December
    b] Rs. 10,000/- if return is field after 31st December.
  2. For taxpayer with income up to Rs. 5 Lakh, Late fee would be Rs. 1,000/-.

Taxpayer should carefully note that the concept of levying “Penalty” is getting replaced by the word “Late fee” which means that there is no escape from it. “Reasonable cause”, “Genuine problem” or “circumstances beyond the control of the taxpayer cannot give an escape route from late fee. One should carefully note that mere payment (or TDS) is not sufficient where filing of the income tax return is mandatory. Even firm and companies are required to file the income tax return mandatorily even if there is no business or income in their hands.

The income tax returns form for the FY 2017-18 has not yet been notified by the CBDT but it is anticipated that the new form would incorporate the column for filing information related to late filing fee and filing the return would not be possible without payment of late fee.

Apart from the late fee, there are other consequences also if the return is not filed within due date. The benefit of carry forward of loss is not allowed to the taxpayers filing the return after the due date. To carry forward the loss for set off in subsequent year, filing of income tax return within due date mentioned above is mandatory.

The worst affected by the new amendment are trusts & institutions who are claiming deductions u/s 10A,10B, 80-IA, 80IB, 80IAB, 80IB, 80IC, 80ID,80IE etc. Also, the trusts registered u/s 12A are also required to file the income tax return within time allowed u/s 139.

Earlier, option to rectify the error by filing revised return was not there for the return filed after the due date. However, with effect from AY 2017-18, option to rectify the return by filing revised return is available even in respect of return filed after the due date.

Filing the income tax return is a little time consuming and the words by Alfred E. Neuman that “Today, it takes more brains and effort to make out the income-tax form than it does to make the income” is perfectly true in the present context. It is better to carefully compile the details early & file the return with perfections rather than facing the music of taxmen later by filing erroneous or incomplete return in a hurry.

It’s a time where not compliances but ‘time bound compliances’ is expected from the taxpayer. After the amendment regarding late filing fee, India is sure to witness the record filing of income tax return within due date.

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