What if you miss your July 31 tax returns deadline!

The deadline for filing income tax returns is 31^st of July for years when the financial year ends on 31^st March. Despite this deadline being an extremely familiar and well known   one, many people still miss it for a variety of reasons. Reasons may be genuine problems or simple procrastination for missing this deadline. In case you miss the deadline there are still ways to retrieve the situation by filing belated returns under various clauses. Discussed in this article are various types of cases when tax returns are not filed by the specified deadline of 31^st July. Most of the tax payers who miss the deadline will fall under one of the following categories whose case is discussed below.

Nil Tax Pending

This includes all such people who have either paid advance tax or have resorted to TDS and thus have no outstanding taxes to be paid up. This is a comfortable situation. One can fill the returns by the end of that financial year without any penalty being levied. Thus for the current assessment year one can safely file returns up to 31^st March 2013. However in case of filing returns for the current assessment year beyond that date will result in a penalty of Rs. 5000 which is again at the discretion of the assessing officer.

With Tax Pending

In the case of an individual who has certain amount of unpaid tax pending due to various reasons such as income from other sources or change of employer in middle of the year, the return can be filed even after the deadline up to the end of the assessment year. However a penal interest of 1% will be charged on the outstanding amount of unpaid tax. For example if an individual has a net tax payable of Rs. 100,000/- and has paid Rs. 60,000/- through TDS and Rs. 30,000/- as advance tax then the outstanding amount is Rs. 10,000/-. For this outstanding amount of Rs. 10,000/- he will have to pay a penalty of Rs.100/- which is 1% of that amount for each month delayed beyond 31^st July in case the return is filed by 31^st March 2013. Thus the net tax payable if paid in October 2012 in this case will be Rs.10,000/- + 3% of Rs. 10,000/- which is Rs. 10,300/-. However if the same return is filed after 31^st March 2013 in the month of April 2013, then there will be an additional penalty of Rs. 5000/- (as applicable in the previous case) making the total amount payable as Rs. 10,000/- + Rs.5000/- + 9% of Rs. 10,000/- which is Rs. 15,900/-. These provisions for late filing and additional penalty clauses are detailed in the section 234 of the IT Act.

Tax Refund Due

In this case also one can file the returns after 31^st July in order to claim the amount due for refund. However the only disadvantage in such a situation is that the refund claim will be processed late and thus the actual receipt of the refund amount may take considerable time.

Losses to be carried forward

For individuals who have losses incurred in the current assessment year and wish to carry forward the same for exemption in the subsequent years, not filing returns by the deadline of 31^st July has the biggest disadvantage. Irrespective of the fact that whether you have outstanding taxes due or not, in case the return is not filed on time then the losses incurred in this year cannot be shown for offsetting income so as to get exemption in the next year. For such individuals it becomes mandatory to complete the process of tax filing before the deadline to advantage of tax benefit in the subsequent years. The only exception in this clause is losses incurred on housing property where one can carry forward the losses even if the return is not filed before 31^st July.

Common Disadvantages

Irrespective of the category that one falls in above discussed cases there are a few disadvantages that one will have to bear in case the returns are not filed before the deadline. The first of these problems is that in case the return is filed after the deadline then there is no revision of the same permitted. This implies that the individual can no longer file a revised return for that assessment year. The other disadvantage is that certain exemptions under Section 80 are not available to assessees who file their tax returns after the due deadline.

Filing tax returns have been made extremely simple and easy in the past few years. The wonderful provision of online filing is also available to all individual assesses. Thus one must endeavor to file the returns before the deadline to avoid missing out on exemptions being given by the IT department.