What happens if you miss the July 31 deadline to file your income tax returns?

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For those who became tax payers recently, the deadline for filing one’s returns is July 31 for the financial year 2017-18 – which ended on March 31. The financial year is succeeded by its Assessment Year (AY). For FY 2017-18, the AY is 2018-19.

First, let’s understand the basics. What is a tax return? Simply put, it is the excess tax that you may have paid the Income Tax Department which you must reclaim. By filing your tax returns, you can get your excess taxes back with interest.

Who must file tax returns?

Individuals of the following age and gross annual income must file their returns – those under 60 earning Rs. 250,000 or more, those between 60 and 80 earning Rs. 300,000 or more, and those above 80 earning Rs. 500,000 or more.

If you’re an NRI with an income of Rs. 250,000 or more in the last year, you need to file return too. Regardless of the brackets mentioned here, you should file your returns to reclaim excess taxes paid, or for several of the other reasons mentioned below.

The benefit of filing returns

Suppose you have paid excess taxes by the way of Tax Deducted at Source, or through Advance Tax, you can file your returns by July 31 to reclaim the excess tax paid. By filing within the deadline, you’ll receive your refund with interest calculated at the rate of 0.5 per cent per month starting from April 1 of the assessment year.

What happens if you file your returns late?

If you’ve missed the deadline, and if you have a tax liability, you’ll need to file belated returns and pay your taxes along with a simple interest of 1 per cent per month on the outstanding due, calculated from the July 31 deadline. Let’s say your outstanding taxes were Rs. 20,000 and you were six months late in filing your returns. Therefore, your liability, with interest, would grow to Rs. 21,200.

There are also now clear penalties for being late in your return filing. If you miss the July 31 deadline, you have the option of filing your returns by December 31, 2018 with a penalty of Rs. 5000. If you file after December 31, your penalty would be Rs. 10,000. However, if your income is under Rs. 5 lakh, the penalty for late filing is fixed at Rs. 1000.

Till when can you file belated returns?

If you need to file a belated return you have to do so by March 31, 2019. You can also file a belated return to correct errors in a previous filing. You will be required to pay the penalties for late filing as described above.

What if you miss the March 31 deadline as well?

If you miss the March 31 deadline as well, you will have to undergo some pain in filing your returns.
Firstly, for missing the returns filing for AY 2018-19, you must file a Condonation of Delay request with the Income Tax Department. This application needs to be filed within six years from the end of the assessment year in which the returns had to be filed. For AY 2018-19, the deadline is March 31, 2024.

Despite this provision, you need to have a genuine reason for being late in filing your ITR filing. For example, you have suffered a genuine hardship, your claim is genuine, or that you’re eligible for a tax refund. The Income Tax Department has to respond to this application within six months of receiving it.

However, since your ITR was filed late, you may receive a notice from the taxman and will have to pay the applicable penalties.

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