Individuals have income exceeding the basic tax exemption limit i.e. Rs 2.5 Lacs or Rs 3 Lacs or Rs 5 Lacs, as the case may be, are mandatorily required to file their tax return, under the Income Tax Act. The due date to file tax return for the immediate past Financial Year i.e. 2016-17 was July 31st 2017. However, such tax return could have been filed after the above due date as “belated tax return”. But form the Finance Act, 2016, the belated returns can be filed within one year from the end of relevant assessment year (AY) or the completion of the assessment, whichever is earlier. So, for the Financial Year (FY) 2016-17 (Assessment Year 2017-18), the due date for a belated return was March 31, 2018, which is just gone by now. Now, the hot question is what should you do if you have still not filed your returns for 2016-17 and what consequences you might face if returns have not been filed?

The following are the implications of not filing ITR on time:

  1. a) Interest of 1% on the balance tax payable for each month of delay in filing a tax return.
  2. b) Assessee will lose the ability to carry forward any eligible losses;
  3. c) Will also lose out on claiming a refund of any excess taxes paid and consequential interest;
  4. d) In case of failure to file a tax return from FY 2016-17 onwards, a penalty of 50% of tax payable (as under-reported income) is applicable;
  5. e) There may be penalties under the Black Money Act for an individual who is ordinarily resident and has/had foreign income/ asset;
  6. f) In case of serious willful attempt to evade taxes, rigorous imprisonment may be considered by the tax authorities which may extend to 7 years;

Apart from the above, the tax return may also be required as documentary evidence for any application for visas or for loans, etc.

Here is the solution if you could not file your tax return of FY 16-17 –

  1. Pay the applicable taxes into government treasury along with applicable interest if the return has not been filed for any reason.
  2. Communicate the fact of payment to the jurisdictional tax officer by filing a letter along with tax paid challan.
  3. In an event where it is noticed by tax authorities that the individual has not filed the tax return, but applicable taxes are already paid by way of tax deduction at source, advance tax or self-assessment tax, Revenue Authorities may choose to not to levy penalty.

Further, there are certain types of income on which tax may not be deducted at source, e.g. interest from savings bank accounts. In such cases, one must remember to pay the applicable taxes and inform authorities. Also, in case you have paid excess tax and also have carry-forward of losses, it is possible to approach tax authorities with an application for condonation of delay, subject to certain conditions. “This can be possible only if robust documentation can be provided to support the tax payment claims and also to demonstrate that there was a reasonable cause due to which the return could not be filed within the due date.

For more updates/clarification you may contact

CA Bharat Poplani


E mail: ca.bharat@bjpassociates.com

Mobile: +91-9646380245