Tax return filing date is almost ending for salaried individuals as on 31st July, 2012 which is now extended to 31st August, 2012, but many people are still in dilemma about whether to file the return or not. Common reason for them to think as such are:
1. Tax is already deducted by the employer and deposited, hence no need to file the return.
2. Form 16 is sufficient proof for me having deposited the tax.
3. I do not owe anything to the government so I will not file the return.
4. If I file the return I will get a notice from the department.
5. Many other reasons, which sometimes sound silly.
This article will help clear doubts about who needs to file return and who does not and what are the benefits of filing the return and disadvantages of non filing.
Who Should File Return
As per the Income Tax Act, persons whose income for the year (Financial Year) exceeds the basic exemption limit shall be liable to file his income tax return. Basic exemption limit has been described as under for financial year 2011-2012:
For Male up to 60 years - Rs. 1,80,000/-
For Female up to 60 years - Rs. 1,90,000/-
For Senior Citizen 60 to 79 years - Rs. 2,50,000/-
For Super Senior Citizen 80 years and above Rs.5,00,000/-
Now all person will have to file his return if the income exceeds the limit as mentioned above. In addition, if any person whose total income during the year is Rs. 2,30,000/- and has savings under section 80C such as Life Insurance policy and has paid premium of Rs. 50,000/- and his net income comes to Rs. 1,80,000/-, then too he will be liable to file his return although not liable to tax. Since his income exceeded the basic exemption limit hence liable to file return.
Due Date of Filing Return
Individuals earning salary or receiving pension, or persons whose accounts are not required to be audited under the Income Tax Act or under any other act, should file their return by 31st July, 2012
Persons other than individuals like Companies, Firms, AOP, BOI, etc., whose accounts are liable to audit should file their return by 30th September, 2012.
Consequences Of Late Filing Of Return
1. Interest Liability Arises
If return is not filed in time i.e. before due date and any tax is outstanding before filing the return then interest liability will arise on the outstanding tax @ 1% per month or a part of month.
2. No Carry Forward of Losses
In case there is loss to assesse under heads like business loss, loss from house property or capital gain (short term or long term) then such loss cannot be carried forward to next year for set off against the gains of succeeding years from same head.
3. No Revision of Return
In case of late filing if any mistake occurs in filling data in the return, then there is no option to rectify the same by filing a revised return. Right to revise the return ceases if the return is filed late. In addition there is a very huge consequences, if the assesse wants to disclose additional income which he failed to show in the return first filed after due date that under section 271(1)(c) a penalty of 100% to 300% of the tax can be levied on assumption of tax evasion. However if return is filed before due date then the returns can be revised as many times needed before completion of assessment.
If an individual does not file his return at all, then, there is a possibility that the Income Tax Department may send a notice for non filing of return along with a penalty notice of Rs. 5,000/-. If a person is carrying on business and is liable to audit, then in his case the penalty is Rs. 1,00,000/-.Prosecution can also be done.
If the assessment year for previous financial year is complete and a person wants to file his return for that previous year then, he can do so but only after paying a penalty of Rs. 5,000.
And this penalty is irrespective of the fact that the tax due from your side may be nil.
5. Delay In Refund
If the return is filed late and there is refund due, then the refund process is bound to get delayed.
Benefits Of Filing In Time
In fact there is no need to explain anything about benefits as the consequences mentioned above once avoided by filing before due date will itself turnout to be the biggest benefits.
All the consequences were related to late filing except for point 4, with regard to penalty.
1. File Before Due Date
File your return before due date as applicable to you and relax. Do not wait for last date as the site goes down on the very last date and you may waste a lot of time to file the return on last date.
2. Claim Interest (Conditional)
If there refund due to you and the department fails to pay you refund in time then the department shall pay your refund along with interest for the delay @0.5% p.m. on the condition that the interest becomes payable only of the refund amount is more than 10% of the tax liability.
3. Other Benefits
In case of application for loan the return also helps as the bank or the finance company always ask for the copy of return filed for at least two years.
Many countries grant visa only after verifying your financial vaibility and hence the return here also serves the purpose.
And last but not the least, every indivdual as well as other entities must abide to the laws of land and be an honest citizen and contribute to the overall grwoth and development of the nation.
This advice is with regard to the notice issued by Income Tax Department where it is said that those person whose income is below Rs. 5,00,000 and has only interest income up to Rs.10,000 from savings bank shall not be required to file their return.
As a word of caution I would ask you to go through article Exemption From Filing ITR if Income Less Than Rs.5,00,000 , as plain reading of this notice may land you in trouble.
Also those who miss the date of filing i.e. for 31st July, 2012 and who have no tax due can file their return up to 31st March, 2013. There is no penalty on the same as the last date of assessment of return for financial year 2011-12 is 31st March, 2013 and an assesse can file his return before completion of assessment. This advice is specially for salaried employees who sometimes miss the last date due to work and other commitments.
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