If you are among those taxpayers who have not yet filed their income tax return (ITR) for the financial year 2016-17, or the assessment year (AY) 2017-18, you must have received emails and messages from the income-tax department reminding you to file the tax return by 31 March 2018. You must remember that if you had income that was above the exempted limit during FY2016-17, then it is mandatory for you to file a tax return. If you had income that was less than the threshold limit for taxes to apply, but you deposited a considerable amount of cash in your bank accounts during the demonetization period, you should file a tax return.
What’s different this time around is that unlike previous AYs, when late tax returns could be filed even one year after the end of the relevant AY, now if you don’t file the ITR for the AY 2017-18 by 31 March 2018, you won’t be able to file it later.
What’s a late tax return
The last date to file tax returns is usually 31 July of each AY. Assessment year is the year in which we assess income, pay taxes and file tax return for the previous year or the financial year. So, for financial year 2016-17, the AY is 2017-18.
The last date to file the tax return for financial year 2016-17 was 31 July 2017, which was later moved to 5 August 2017. A tax return filed after the due date of that year is considered belated return.
The Central Board of Direct Taxes (CBDT) has decided to give a last chance to persons who have not filed income tax returns for the last two years. An advisory issued by the Board last day said that such persons can file income tax returns by 31st March 2018.
“Income Tax Department has identified a large number of persons who have not filed income tax returns for the assessment year 2016-17 and 2017-18 although they have made high-value transactions or deposited; a large amount of cash in bank accounts,” the Board said.
Belated return: disadvantages
Not filing a tax return on time has consequences, and you will lose out on some benefits.
For starters, there are penalties and interest levied on the income tax that was due. “The person who files a belated return for AY 2017-18 may be subject to a penalty of Rs5,000 under Section 271F of the Income-tax Act, 1961,”
Apart from the penalty, interest too may be levied under various sections. “If any tax is due, interest may have to be paid under sections 234A, 234B and 234C of the Act,” said Gupta.
From the next AY, 2018-19, a fixed amount of penalty will be charged on belated tax returns. “Section 271F will get replaced by section 234F, which prescribes a late fee of Rs5,000 if the return is filed after due date and up to 31 December, and Rs10,000 (from 1 January) up to 31 March of AY. However, if the total taxable income of a person doesn’t exceed Rs. 5 lakh, late fee shall not exceed Rs1,000,”.
If there is any refund, it may be delayed and taxpayers will not receive interest on refund from 1 April of the AY. Interest will be paid from the date on which the tax return was furnished till the date on which refund is granted. “If return is filed within the due date, interest is paid effective 1 April of the AY to the date on which refund is granted,”
The following persons are required to file income tax return mandatorily,
All Companies, Partnership Firms, LLPs Trusts, Associations, Political Parties (whose income prior to claim of exemptions exceeds the minimum chargeable to tax)
Individuals and HUFs having income more than Rs. 2.5 lakhs (For Senior Citizens, Rs. 3 Lakhs (Age 60 Years up to 80 Years) and Rs. 5 Lakh (Age 80 Years or More)) .
It further said that “If you have deposited large amounts of cash in your Bank account, or made high-value Transactions, Please consider the same while filing your income tax returns. Non-filing or incorrect filing of return of income may result in penalty and prosecution.”
According to the CBDT Advisory, belated returns for the assessment year 2016-17 and 2017-18 and revised returns for the assessment year 2016-17 (with interest, if any, for late filing cannot be filed after 31st March 2018).
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