Merely paying the due amount of tax is not sufficient. In addition, the Income-tax rules require a taxpayer to also file return, irrespective of whether tax is due or not. Therefore, for all NRIs who are having income exceeding the basic tax exemption limit are mandatory required to file their tax return, under the Income Tax Act. The due date to file tax return for the immediate past Financial Year was July 31 each year. However, tax return can also be filed after the above due date as “belated tax return”. According to the amendment in the Finance Act 2016, you can file your belated IT returns anytime on or before 1 year from the end of the relevant Assessment Year (AY). For example, for the AY 2016-17, a belated return can be filed on or before 31st March 2018. However, with the amendment vide Finance Act 2016, from AY 2017-18 belated IT returns should be filed before the end of the relevant AY. For instance, for the AY 2018-19, a belated return can only be filed on or before 31st march 2019.
What to do if you receive a notice asking you to file the tax return? What should you do if you have still not filed your returns for FY 2016-17 and what consequences you might face if returns have not been filed?
The following implications of not filing the ITR on time:
- Interest of 1% may be applicable u/s 234A, 234B and 234C on the balance tax payable for each month of delay in filing a tax return.
- In case return is not filed within the due date, a fee of INR 5,000 is applicable and if it is delayed beyond December 31 of the relevant assessment year then it is INR 10,000. However, this will be restricted to INR 1000 in case of individuals with income up to INR 500,000
- You will lose the ability to carry forward any eligible losses;
- Delayed returns cannot be revised. However, from FY 2016-17 onwards, belated returns can also be revised.
- You may also lose out on claiming a refund of any excess taxes paid and consequential interest;
- In case of failure to file a tax return from FY 2016-17 onwards, a penalty of 50% of tax payable (as under-reported income) is applicable
- There may be penalties under the Black Money Act for an individual who is ordinarily resident and has/had foreign income/ asset
- In case of serious willful attempt to evade taxes, rigorous imprisonment may be considered by the tax authorities which may extend to 7 years;
While one should target to file a tax return within the due dates, the applicable taxes should definitely be deposited into government treasury along with applicable interest if the return has not been filed for any reason.
Such payment should be communicated to the jurisdictional tax officer by filing a letter along with tax paid challan. In an event where it is noticed by tax authorities that the individual has not filed the tax return, but applicable taxes are already paid by way of tax deduction at source, advance tax or self-assessment tax, Revenue Authorities may choose to not to levy penalty (as indicated earlier, fee for delay in filing tax returns from FY 2017-18 would still be applicable).
There are certain types of income on which tax may not be deducted at source, e.g. interest from savings bank accounts. In such cases, one must remember to pay the applicable taxes and inform authorities. Also, in case you have paid excess tax and also have carry-forward of losses, it is possible to approach tax authorities with an application for condonation of delay, subject to certain conditions. This can be possible only if robust documentation can be provided to support the tax payment claims and also to demonstrate that there was a reasonable cause due to which the return could not be filed within the due date.
Given the complications involved in deferring returns filing beyond the due date, it is best to aim for timely filing of tax returns, notwithstanding the grace period available to you.
The GPK advantage:
If you wish to file your tax returns beyond 2 years, we can assist you to prepare, submit and comply with the Income tax provision in the best possible manner. We have a team of in-house tax experts who can accurately file your tax returns online while giving you maximum tax benefits. You can write to us at firstname.lastname@example.org or call on +971563744876.