‘Missed the tax filing deadline? Don’t worry; it’s not too late’

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Sameer Buchha & Sunita Seth:

The due date for tax return filing for year ended March 2008 has just gone by i.e. July 31. Did you miss it? No need to worry. Income tax rules are not so harsh after all!

In case you have already paid your taxes before 31 March, 2008, but could not file the return within the due date, you may file a belated return at any time before 31 March, 2009, without attracting interest or penal consequences. However, if you file your return after that, you may invite a tax penalty of Rs 5,000, even if all your taxes have been paid. However, penalty shall not be levied if there is a genuine and reasonable cause for delay in filing the return.

On the other hand, if you still have any outstanding taxes to be paid (after deducting TDS and Advance taxes paid, if any) you would be liable to pay simple interest @ 1% per month or part of the month, on the tax payable commencing from the date following the due date till the date of filing the return.

Further, additional interest is payable for non payment of advance tax @ 1% per month or part of the month from the end of the financial year till the date of filing the return. It may be noted that this interest is levied only if the advance tax paid is less than 90% of the net tax payable.

However, there are some other implications of belated tax filing, which need to be kept in mind but are generally overlooked.

Firstly, if you have suffered any loss from business/ profession or on sale of capital asset, you will lose the benefit of carrying forward such losses to future years for set off. Normally, if the return is filed in time, the law provides the facility of carrying forward the losses for set off against future income for the next eight years. However, like the proverbial silver lining, house property loss and unabsorbed depreciation can still be carried forward even if your return is filed belated. Moreover, a belated return does not restrict current year losses from being set off against the current year’s income. Therefore, in short, if you do not have losses from business/profession or capital loss, belated filing of return would not have any negative consequences.

Secondly, you would not be able to revise your return, which is otherwise permitted at any time before the end of the next Assessment Year (AY). For a return pertaining to the year ended March 31, 2008 (AY 2008-09), the date limit is March 31, 2010. The need to file a revised return could arise if you happen to discover any omission or any wrong statement in the return after it is filed. But you can always apply for rectification, if there is any mistake apparent from record.

So, better late then never! You still have time to file your tax return for FY 2007-2008 upto March 31, 2009 to avoid a penalty of Rs 5000 u/s 271F. But please keep in mind that if you fail to file your return for FY 2007-2008 on or before March 31, 2010, the income tax department has the authority to assess your income on Best Judgment basis u/s 144(1). Also any return filed after March 31, 2010 will be considered as void and is as good as not filed at all.

It is said, “Time is money”. It is also said, “A stitch in time saves nine”. Hence, timely filing of return can save your money on

account of interest and penalties.