What if assessee is unable to file return with in due date

What if assessee is unable to file return with in due date


Who is required to file return of income?

·         Firms & companies: - Every company and partnership firm should furnish return of income in respect of its Income or loss for every previous year. It means they have to file return even if they are incurring losses.

·         Others: - in case of others, they have to file return, if the total income before giving special deductions U/s 10A, 10B, 10BA or deduction under chapter VI-A exceeds the maximum amount chargeable to tax.

However, if assessee wants to carry forward any losses to subsequent years,he has to file return mandatory.

Due dates for filing income tax return: -

As per section 139(1) of the income tax act;

Assessee

Due date

Corporate assesses

30th September

Non-corporate assesses who are subject to audit

30th September

Corporate or non-corporate assesses who are required to submit TP report

30th November

Any other assessee’s

31st July

 

What if assessee is unable to file return with in due date: -

If a return is not furnished within due dates prescribed above or within time allowed under a notice U/s 142(1); then it is called belated return.

Time limit for filing return lately: -

As per sec 139(4), a belated return can be filed at the earliest of;

·         Before the assessment is completed and 1 year from the end of the relevant assessment year.

Consequences of late filing: -

  • 1.       The assessee will be liable to pay interest under sec 234A.
  • 2.       A penalty can be imposed U/s 271F; if return is filed after the end of assessment year.
  • 3.       Few losses cannot be carried forwarded.
  • 4.       Some deduction and exemption cannot be claimed if return filed lately. Ex: exemption like 10A, 10B, 10BA and deductions like 80-IA, 80-IAB etc.
  • 5.       A belated return cannot be revised.

 Interest to be paid if filed lately: -

Filing return lately will attract interest U/s 234A which is as follows:

Interest=Principal component X Time component X rate.

Principal component:Normal tax payable less TDS/TCS less relief U/s 90,91,90A less advance tax.

Time component:From the expiry of due date to file return to the actual date of filing return.

Rate:Interest shall be calculate @1% per month or part of month.

Penalty: -

If assessee fails to file return within due date specified, then penalty of Rs. 5000 may be imposed.

If the assessee proves that there is reasonable cause for such failure then no penalty shall be levied.

Conclusion: -

If you are filing a return after the due date, you need to be very careful that the rerun does not have any errors. Because you will not have an opportunity to rectify it through revised return.

Earlier at any point of time we can file belated return for 2 previous years along with the current year. Income tax department was trying to discourage the tendency of late filing and encourage in time filing. Now, as per new amendment one can file belated return only for 1 previous year along with the current year. Income tax department was trying to discourage the tendency of late filing and encourage in time filing. So, it is better to file returns in time.