“Last date for filing tax returns is 31st July” the only sentence looming large on everybody’s mind for the past few days. People all over the country are rushing to file their tax returns for the financial year 2015-16. The common perception amongst most of the people in India still set on the fact that since TDS(tax deduction at site) has been deducted filing of tax returns is not important. Some people on the other hand, ease off as an Income tax return for FY 2015-16 can be filed by March 2017. Sticking to the target date of 31st July however has its own added advantages:
1. NO Carry forward of losses:-
Losses under the following heads of income: Income from business and profession including speculation business, capital gains, and income from other sources cannot be carried forward in case a return is filed after the last date by the tax payer. The return filer will not be allowed to carry forward these losses even if all taxes have been paid in time if the return is belated
Sometime there is a slight chance of an error while filing your income-tax return, in case the tax-payer discovers a certain discrepancy in the income the s/he wishes to declare. A tax payer who files his return on time can revise the same umpteen times. However, in case a return is filed late, revision is not possible.
Taxpayers who file their tax returns on time get their returns processed quickly and hence get tax refunds faster. In case of late filing of tax returns, interest by the authorities is only payable from the date of filing of return to the date of payment. No interest is payable for the delayed period
In case of late return, the taxpayer is liable to pay an interest at the rate of 1% per month on the tax due till the date of filing of tax return. Also a penalty of Rs 5,000 may be levied by the tax department. In case of willful delays, there are provisions of higher penalties and even prosecution in some extreme cases.
An income tax return is also a document for proof of income. It is useful in various circumstances such as applying to banks for a loan or applying for a credit card. This helps the banks determine the financial capability of an individual.
Foreign countries want to make sure that an individual is financially sound before granting them a visa. Hence they rely on a person’s income tax return to vouch financial stability.
Considering the advantages of filing a tax return on time outweigh the disadvantages, it is advisable to ensure that the income tax return is filed within the due date i.e July 31, 2016.