One of the most tedious responsibilities of being an adult is keeping your finances in line, and filing your taxes on time. Especially when it comes to filing taxes, many of us would rather prefer that we did not have to put in so much time and energy just to calculate how much money we’ll have to let go of. As a working professional, it is important that you file your taxes on time, especially if you’re not a fan of paying fines and penalties.
For investors, tax planning is an important part of their financial planning journey; a lot of portfolio decisions are made on the basis of how much tax one has to pay. Nowadays, to make things easier for the people, there are numerous online portals and platforms that help you file your taxes with ease. However, despite, having all the help available, sometimes the inevitable happens, you miss the last date for filing taxes.
There are no drastic implications as such, but there are a few disadvantages, as expected. Here’s a short guide to help you out in case you’ve missed filing your taxes.
The Belated Tax Return
For those who miss the last date for filing their income tax returns, there is a provision known as the belated income tax return. The belated tax return can be filed before the current assessment year runs out. So if you miss filing your taxes for FY 17-18, you can file a belated income tax return by August 2019.
Filing a belated return is similar to filing a regular return, except that it obviously comes with a few penalties and restrictions. Since FY 16-17, it is also possible to revise your belated income tax returns. You can make the revision either before the end of the assessment year, or before the tax authorities complete the assessment of the tax returns.
Here are the implications of filing a belated tax return –
- Penalty – Under Section 234F of the Income Tax Act, any individual filing a late return after the due date is liable to pay a fine of upto INR 10000. According to the Income Tax Act, from the financial year 2017-2018, taxpayers shall pay a fine of INR 5000 if they have filed their taxes after the due date but before the end of the calendar year. So if you haven’t filed your return between the period of August 2018 and December 2018, you will have to shell out INR 5000. If the return is filed on or after 1st January 2019, you will have to pay INR 10000. However, if your taxable income does not exceed INR 500000, you only have to pay INR 1000.
- Interest– If you’re filing a belated tax return and you have an existing tax liability, a penal interest will be levied along with the fines. In case you do not have any existing liability, no fines will be levied.
- No Carry Forwards – The following losses cannot be carried forward if you’re filing a belated income tax return – Income from business and profession including speculation business, capital gains, and income from other sources. This is true even if all the taxes have been paid in time, but the return was not filed before the due date.
Get in touch with a certified financial planner if you’re finding it hard to understand what to do with your taxes.