March 31, 2018, is a very special date for all the income taxpayers. The reason why it is special is that it is the due date to file I-T returns for 2 financial years, i.e. FY 2015-16 and FY 2016-17. Whether you missed the first due date (July 31) or you want to revise your I-T return, you should do it by March 31, 2018. Earlier taxpayers were allowed to file belated tax returns even one year after the end of relevant AY. Therefore, taxpayers who have not filed returns for FY 2015-16 can file a belated return by March 31, 2018. However, starting from AY 2017-18, belated returns can be filed before the end of relevant AY i.e., March 31, 2018. If you don’t file belated returns by this due date, you will not be allowed to file returns for these two FYs unless you receive asection 142(1) notice.
Reasons why you may want to revise your Return
There are a number of reasons why you may consider revising your return. You may have made some errors or omissions in your return due to which you may be paying incorrect amount of taxes. If you are paying more tax, then it is a financial loss for you. If you are paying less tax due to incorrect filing, you may end up getting notices, paying penalties and interest. You may have made any of the following errors or omissions on your tax return due to which you need to file a revised return:
You may own some foreign assets. As per the tax laws, such assets need to be reported in the ‘Schedule FA’ of your income tax return.
You may be a taxpayer who had income more than Rs 50 lakh. As per the tax laws, you are required to report your assets on your tax return but forgot to do so.
You earned dividends exceeding Rs 10 lakh, but missed to report this income in your ITR. If you forgot to do it, then don’t wait for a reminder from the tax department.
You failed to include income earned as interest from your savings bank account. If your interest income exceeds Rs 10,000 in a year from all your savings bank accounts, it must be reported in your income tax return under the head ‘Income from Other Sources’.
You may have deposited a large sum of cash post demonetisation. If you filed your tax return without properly reporting the source of such cash appropriately, then you should consider revising your return. There are severe penal provisions under the law for those who fail to declare undisclosed income within the demonetisation window.
If you forgot to provide any other important information in your ITR or failed to claim any tax deduction, then do not wait for a reminder from the tax department to revise your return. File a revised return as soon as possible because you have only a few days left to do so.
Disadvantages of filing belated tax return
There are various penalties and interest applicable to those who didn’t file on time and are filing a belated return.
The person who files a belated return for AY 2017-18 may be subject to a penalty of Rs 5,000 under Section 271F
If any tax is due, interest may have to be paid under sections234A, 234Band234C
From the 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 Rs 5,000 if the return is filed after the due date (31st July) and up to 31 December, and Rs 10,000 (from 1 January) up to 31 March of AY.
However, if the total taxable income of a person doesn’t exceed Rs 5 lakh, the late fee shall not exceed Rs 1,000
Another disadvantage is that you cannot carry forward capital loss
Refunds get delayed and taxpayers do not get any interest on the refund
Disadvantages of not even filing a belated and revised return
You can get notice of inquiry under section 142(1) or a notice of income escaping assessment under section 148.
If you don’t reply to any notice form tax department or don’t file your return within the stipulated time mentioned there, your problem can escalate, depending on the tax due.
In case where you have not received any notice from the tax department and you also failed to file your return by last date for filing the belated return but you discover that you have tax due to the department it is advisable to calculate and pay the due taxes with the applicable interest and write a letter to your jurisdictional AO. This may help you to avoid related penalties for under-reporting of income.
If you have a taxable income and still don’t file a tax return, then in addition to the penalty for non-filing of return, you may also be subject to a penalty for under-reporting of income at 50% of the tax payable on under-reported income.
In some cases, criminal proceedings can be initiated.
Shreya is a tax advisor at H&R Block (India) with intensive experience in SME taxation and audit. She holds an advanced post graduate qualification in accounting and is highly skilled in financial analysis and reporting. Apart from her professional achievements, Shreya is a talented artist with a flair for free-hand sketching!