Concequencies of not filing Income Tax Return by due date

Income Tax Return within due date

  1. It is Mandatory to file an Income Tax Return for a Company and Firm (Partnership/LLP) irrespective of the fact that it has any income or not.
  1. Matter of choice to file Income Tax Return by
  2. Individuals/ HUF/ AOP (Association of Persons) / BOI (Body of Individuals) / Artificial judicial person: If Gross Total Income (Income before giving exemption for deductions under chapter VI-A exceeds the maximum amount not chargeable to tax) is more than Basic Exemption Limit which is currently Rs. 250, 000 for Individuals, Rs. 300, 000 for senior citizen (above 60 years age) and for super senior citizen (above 80 years age) Rs. 500, 000.
  3. Every Resident (IF INDIVIDUAL RESIDENT or ORDINARY RESIDENT)
  • Beneficial owner in any asset located outside India (Benami Transaction); or
  • Beneficiary of any asset (or financial Interest of any entity) located outside India

(Beneficiary is anybody who gains an advantages and/ or profits from something.

Beneficial Interest is the right to receive benefits on assets held by third party.)

Income Tax Return Due date

30th September of Relevant Assessment Year: In case of Tax Audit/ Audit under any law, partnership firm Claim that their Income is less than Presumptive Income  as mentioned under section44AD/ 44AE.

30th November of Relevant Assessment Year: In Transfer Pricing Report is required to submit under section92E

31st July of Relevant Assessment Year: Other cases (Partnership Firm)

NOTE: – Relevant date for working partner depends upon the due date of ROI of Firm.

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:

Liability for interest: 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 return 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, 2017.

Possibility of Penalty and Prosecution: If you do not file your Income Tax Return by 31st March 2017, 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 2017 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.

For obtaining 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 return.

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 return.