The due date for filing tax returns for fiscal 2011-12 for most individuals is July 31, 2012. It is now mandatory for individuals and Hindu undivided families (HUFs) to file tax returns online if their total taxable income is above R10 lakh or they are ordinary residents holding foreign assets, having financial interest or are a signing authority in any account outside India. Otherwise, taxpayers have an option to file in hard copy also.
If you haven?t filed your returns within the due date, you can file a belated return within one year from the end of the assessment year or before completion of the assessment, whichever is earlier. In simple words, the returns for FY12 can be filed by March 31, 2014, if any assessment has not been initiated. However, if the tax return is filed after March 31, 2013, the tax officer may levy a penalty of R5,000 under the Income Tax Act, 1961.
There are additional reasons why you should file your tax returns before the due date.
To avoid interest liability
Apart from the interest which is levied under various sections of the Act, interest is also levied if the tax returns are not filed within the due date. As per Section 234A of the Act, an interest is levied at 1% per month from the due date of filing the returns to the actual date of filing on the tax payable, subject to certain conditions. Hence, filing the returns within the due date can help avoid this interest liability.
To carry forward the losses
As per the Act, if a person has a capital loss or business loss, the same can be carried forward and set off from next year?s income. This is permitted if tax returns are filed within the due date. Hence, if you have capital loss or loss from business or profession and you want to avail of the set-off benefit, you must ensure filing of tax returns within the due date.
To revise your tax return
There may be some details that are unavailable by the due date. In such case, the Act allows filing of ?belated returns? within one year from the end of the assessment year or completion of assessment, whichever is earlier. However, you have to forgo the right to carry forward your losses or revise the returns. In such a case, you can file returns within the due date and then revise it with actual details.
To obtain early refunds
There is an interest liability under Section 244A of the Act on the I-T department if there is a delay in payment of refunds, subject to certain conditions. Hence, you may be lucky to get an early refund if your return is filed on time. So, even though provisions exists for filing tax returns after the due date, it?s best to file within the due date.
Going about I-T
The first step for filing the tax return is to compile the relevant documents, which include Form 16 obtained from the employer, Form 16A obtained from the concerned vendors who have deducted tax, bank statements, details of other sources of income and details of tax paid. Form 26AS (consolidated tax statement) should also be collated to find out the amount of taxes that have been deposited in your name in the government records.
Once the required documents are compiled, the total taxable income and the total tax liability should be computed. After adjusting the advance tax paid, if any, the balance tax liability needs to be deposited as self-assessment tax with interest, if any. Thereafter, the tax return can be prepared and filed with the tax authorities in hard copy or electronically, as applicable.
Calculate and pay the balance taxes and interest. Once you have all the documents in place and have verified your tax credits, you would need to calculate any balance taxes payable. This is calculated after adjusting the TDS and advance taxes paid during the year. Balance tax can be paid in the form of self assessment tax along with interest, if applicable.
Choose the right tax return form. There are many forms for individuals like ITR 1 (Sahaj), ITR 2, ITR 3, ITR 4 and ITR 4S (Sugam). The tax return applicable depends on various sources of income earned during the year. Fill the necessary information in the tax returns. While filling the tax return, correct personal details like taxpayer?s name, PAN, address, residential status, etc, should be provided. The details of income earned under the various heads, deductions claimed, tax paid, etc are required to be provided in the tax return.
A stitch in time…
* A belated return can be filed within one year from the end of the assessment year or before the completion of the assessment, whichever is earlier
* However, if the tax return is filed after March 31, 2013, the tax officer may levy a penalty of R5,000 under the Income Tax Act, 1961
* Apart from the interest which is levied under various sections of the Act, interest is also levied if the tax returns is not filed with the due date
* If a person has a capital or business loss, the same can be set off from next year?s income. This is permitted if returns are filed within the due date
* Choose the right tax return form. The tax return applicable depends on various sources of income earned during the year
The author is director, KPMG. Views expressed are personal.
