Three more days are left for taxpayers to file their income tax returns for this financial year. Though there are no penalties, individuals are advised to avoid missing the deadline since the delay could lead to a loss of money. The penalty proposed for people missing the deadline doesn’t apply till next year. So it is not applicable on ITRs filed for the financial year 2016-17.
If one wants to claim refunds on advance taxes paid or on tax deducted at source, one will lose the interest payable to them by the IT department on the said amount. The IT department calculates the interest on refund from the start of the assessment year i.e. April 1 till the date of granting of refund.
However, if one is late in filing the returns, the interest will be calculated from the return filing date. For example, if one files the return on July 31, the interest will be calculated from April 1. However, if they filed the return on August 1, the calculation will be done from August 1, meaning a delay of one day could result in a loss of four-month interest (April-July).
One must pay penal interest of 1 per cent per month from the due date of return filing till the actual day of filing if they file the IT return after due date with unpaid tax liability. The fine can be accompanied by prosecution by the IT department if the return is filed later than the assessment year and if it exceeds Rs 3,000. In case one fails to file tax returns by the end of the assessment year (for financial year 2016-17, assessment year is 2017-18) and has paid paid all the tax liabilities, the tax department will impose a penalty of Rs 5,000 if one fails to convince them that the delay was justified or due to an unavoidable/uncontrollable circumstance.
Apart from this, it is mandatory to report cash deposits above Rs 2 lakh during the demonetisation period, which was from November 9, 2016 to December 30, 2016. It is likely that the IT department may contact one via written correspondence asking them to file their return in time.
Anyone who has registered with the Income Tax Department, has filed a return before, linked their Aadhaar with their bank accounts and/or PAN is most likely to get a text message from the IT department reminding them to file their ITR.