Life is full of uncertainties.
Due to certain unavoidable circumstances, there is a possibility that you could end up missing the due date to file your tax returns. Another setback is the anxiety of having to pay a penalty for this lapse.
You may have read that a delay in filing tax returns could attract a fine that can go up to Rs 10,000, under the provisions of a new Section 234F of the Income Tax Act.
If this is a stressor, stay calm because the penalty for default, under Section 234F, is applicable from next year.
But please note, the penal interest will still apply. This could be a considerable amount if your tax dues are high.
Under Section 234A, interest would be levied @1% per month, calculated from the due date. In addition to this, if you are unable to file your returns before the end of the assessment year, i.e. March 31, 2018, a fine of Rs 5,000 may still be applicable.
An assessing officer may, at his discretion, charge a fine of Rs 5,000 under Section 271F of the Income Tax Act. Section 271F states, if one fails to furnish tax returns before the end of the relevant assessment year, the Assessing Officer may direct that person to pay a penalty of Rs 5,000.
Thus, if you are filing a belated return for AY2017-18, make sure to do it before March 31, 2018, to avoid the probability of an additional penalty.
From next year onwards, ensure to file tax returns well in advance, because a window of opportunity to avoid the fine will not exist.
After April 1, 2018, the new Section 234F,in respect of penalty for delay in furnishing return, will come into effect, while the provisions of Section 271F shall cease to exist.
Under Section 234F, belated returns filed after December 31st of the relevant assessment year will attract a fine of Rs 10,000. For returns filed after the due date but before December 31st of the assessment year, there is a penalty of Rs 5,000. However, for individuals with a total income less than Rs 5 lakh, the penalty will be Rs 1,000. Under this section, not only are the fines steeper and applicable immediately after the due date, but the assessing officer plays no role in deciding the applicability of the penalty.
Thus, from the next assessment year onwards, if you delay filing your income tax returns, along with the tax and interest payable, a fee for delayed furnishing of return of income will be applicable.
If possible, always file your returns before the due date, even if you have to expedite the process. By rushing to file your returns, you may be apprehensive about making errors. However, this should not stop you.
If there are any unintentional errors, you can always file a revised return. For example, if you have missed to claim a donation under Section 80G, you can file a revised return and get a tax refund.
You can file a revised return under
Section 139(5) of the Income Tax Act, if the original return is filed on or before the due date. You can file a revised return before the end of the next assessment year, which is March 31, 2019 for AY2017-18.
Please note, the deadline for filing revised returns has been reduced. From next year, i.e. AY2018-19, the deadline for filing revised returns is March 31, 2019.
This is even more reason to plan your taxes well ahead of time.
There are
several benefits of filing your returns well before the due date. Avoiding penal interest and late payment is the primary advantage. Apart from this, you will eliminate the stress of filing returns at the last minute and there will be sufficient time to eliminate errors, if any.
e-Filing your returns is an extremely simple process with the new one-page Income Tax Return (ITR) form. You can e-file tax returns from the comfort of your home. (Read:
How To e-File Your Income Tax Returns In Few Easy Steps…)
It is equally crucial to set up a tax plan well in advance. Tax planning as an exercise is not just limited to filing returns and paying taxes. It is a process where you focus on the larger financial plan after accounting for your age, financial goals, ability to take risk, and investment horizon (including nearness to financial goals).
You can appoint a financial planner or a financial guardian to suggest the best tax-saving products enabling you to save tax and align them to achieve your financial goals as well. It would therefore be worthy to reach out to a
Certified Financial Guardian – a mark of trust and respect, who can prudently counsel and handhold you to streamline your personal finances.
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