Under Income Tax Law if your total income exceeds the basic exemption limit: You have to file the Income Tax Return within the prescribed time, i.e. by the due date.
The due dates of filing returns for Assessment Year 2014-15 are the following:
Most people fall in this category –
Salaried employees, pensioners and other
persons whose accounts are not required to be audited
31st July 2014
Companies and other persons whose
accounts are to be audited
30th September 2014
What happens if a person does not file the Income Tax Return by the due date
- Revised return can not be submitted in case you have not submitted your return in time.
- You have to Pay Interest on Income Tax Due if you don’t file on time If you do not file the Income Tax Return by the due date:
- You are liable to pay interest at the rate of one percent for every month after the due date till the date of filing the return.
- If No Tax is due: Interest is calculated on the amount of tax payable after adjustment of pre-paid taxes like advance tax, TDS etc. So, if there is no tax payable on the basis of the Income declared in the Tax Return, there is no liability for the payment of interest.
- You don’t get the benefit of Carry Forward of Losses if you don’t file on time Under income tax law, if you have sustained a Business loss or loss under the head “Capital Gains”, you can carry forward the loss ONLY if you file the Income Tax Return by the due date.
- Therefore, if you have sustained a loss, you must file your Income Tax Return in time if you want to carry forward the loss for future adjustment with your Income.
Possibility of Penalty or Prosecution by the Income Tax Department
- Say you could not file the Income Tax Return by the due date: To avoid any penalty by the Income Tax Department, you must file your Income Tax Return before the end of the relevant assessment year that is 31st March 2015.
- Possibility of Penalty and Prosecution: If you do not file your Income Tax Return by 31st March 2015, the Income Tax Department may impose a penalty of Rs. 5000, even though the tax payable by you may be Zero.
- Further, if a person has failed to file the Income Tax Return by 31st March 2015 and the tax payable after adjustment of advance tax and TDS exceeds Rs. 3000, he may be prosecuted for imprisonment also. However, this law is used in practice very rarely.
- Other reasons for filing the returns of income within time If a refund is due after adjustment of prepaid taxes, it is necessary to file the Income Tax Return to get the refund from the Income Tax Department.
- Bank Loans: Further, the return is a declaration of your income and it will be extremely helpful when you are applying for a loan from bank. Before granting the loan, banks want to know your financial capacity and your income details as shown by you in income tax returns.
- Visas of foreign countries: Many countries want to know if you are financially sound before they issue you a visa and for this purpose they will rely on your income tax returns.