According to the law, July 31st is annually the last day to filing taxes. However, this year the date was extended to 5th August to accommodate last minute filing. But what happens when you miss this deadline as well?
The Income Tax Act of India has some stringent rules for evading or late filing of taxes so here’s what happens when you miss tax filing:
1) A failure to file as well as a failure to pay penalty may be levied if you miss the final deadline.
2) Penalty of 5% is usually levied on the unpaid tax amount of each month. If the amount is still unpaid the day after the deadline then this 5% amount will keep increasing but won’t exceed 25% on your total unpaid amount.
3) Your time for revising income tax returns will decrease. Earlier the time given to people were two years after the end of a financial year, however, this rule was changed and people now have a year to revise the details and correct errors. The earlier you file your taxes the more extension you will get.
4) An interest rate of 1% is levied per month or part of the month if the taxes are not filed on time. The said interest is payable on tax payable after deducting the TDS (tax deducted at source), TCS (tax collected at source), advance tax and other reliefs/ tax credits available under the law.
5) None of your losses will be carried forward if you don’t pay your taxes on time. Under the head ‘profits and gains of business or profession’ or ‘capital gains’ the taxpayer will not be allowed to carry forward any loss.
6) The income tax return processing will also be delayed if tax is not filed on time. Once the process takes place it is only then when the tax liability and the return of the taxpayer is determined. Hence, delayed filing will lead to a delay in returns and receipts.
So now that you know the consequences, what should you do if you missed the deadline?
1) Pay immediately of course, and also make sure that you file all your taxes on time henceforth.
2) You can file a belated ITR. It can be filed before the end of the assessment year. You are also permitted to revise a belated return in-case you make an error or miss out on certain incomes..
3) If you owe a lot of tax and can’t pay it all off in one go then pay as much as you can.
4) Make sure you’ve paid all your penalties before paying the taxable income.
So that’s it, filing taxes can be a tedious task but ensure you file your taxes and on time. Don’t delay as you can see the amount of consequences above. Also paying taxes on time can save you money (since you don’t have to pay penalties) as well as takes away any kind of hassle that may occur in the future.