LATE INCOME TAX RETURNS ????

LATE RETURNS - What if you miss the 31 July ITR deadline?

BY BINDISHA SARANG


With just about a fortnight left to the last date of filing returns, you don't have much time on your hands. However, if you are unable to meet the deadline due to unexpected circumstances, there's still a way out, though it may come with a cost attached.
Extensions are passé Earlier, it was common for the income-tax (I-T) depart- ment to extend the last date of filing. But you better not bank on it because there have been no extensions for the last few years. “Extension of deadline was a trend a few years back, but for the last four years or so, the I-T department has not made any deadline extensions,“ says Ankur Sharma, director, TaxSpanner.com, an online tax preparation and filing portal.
Grace period You can actually file returns up to 31 March 2011. Says Sharma: “If an individual does not file return of income by the due date, he can still file re- turns up to 31 March of the next financial year. In such a case, no penalty is imposed.“
However, you may have to pay a penalty of Rs5,000 if this 31 March deadline.
The caveat But getting a grace period is not the end of the matter.
While the grace period would solve your basic problem of fil- ing returns for a year, you may face some caveats. Loss not carried forward: Tax rules permit you to carry for- ward losses, such as loss in- curred through a business, property or investment, to the next assessment year. If you file your returns after 31 July, you won't be able to carry for- ward losses. Losses incurred under the head “house proper- ty“ are an exception though.
Interest you'll be charged If you delay filing your re- turns beyond 31 July, you will have to pay interest under cer- tain circumstances. Says Shar- iq Contractor, partner, Con- tractor, Nayak and Kishnadwa- la, a chartered accountant firm in Mumbai: “(Though) the penalty is based on the discre- tion of the income-tax office, the interest is mandatory on tax payable which are de- layed.“

Here are the heads on which you will have to bear additional interest burden.

Income-tax due: If you had income-tax dues in the current assessment year and you ha- ven't filed your returns in time, you will be charged interest.
According to section 234A, you will have to pay a simple inter- est of 1% per month on the amount of income-tax due.

Advance tax due: An individ- ual is required to pay advance tax on three prescribed dates every fiscal year; whatever re- mains needs to be settled at the time of tax filing. If you settle, say, 90% of your advance tax on the last instalment date and didn't file returns till 31 July, you will have to pay 1% simple interest per month on the re- maining 10% advance tax, ac- cording to rules of section 234B (shortfall in payment).

Under section 234C (failure in payment), “in case you owe advance tax and you have failed to pay that by the due date, you will be charged a simple interest of 1% per month if the advance tax payments in the prescribed time frames are less than the re- quired percentage,“ says Shar- ma.

However, you won't be charged interest if the shortfall in payment of advance tax is on account of underestimation. For instance, if you get an income by sale of property on 16 March, and the advance tax instalment deadline was 15 March, then there was no way through which you could have estimated this income and paid advance tax on it. So, as long as you pay ad- vance tax on such income when you file you returns, before the deadline or any time up to 31 March of the fiscal year, you will not be charged any interest. The same rule applies if you failed to estimate capital gains or if you have income from winning lot- tery.

Wealth tax: If you don't file returns of wealth tax on time, you will again have to pay a simple interest of 1% for every month of delay.

Contractor says, “The I-T de- partment may send you a no- tice and you would unneces-sarily expose yourself to penal- ty.“ Since there's still time left, why not simply hurry up.