With the income tax returns filing deadline just around the corner, here are three major things you should get out of the way by March 31.
1. Filing Your Tax Returns if you have missed it earlier:
Most of you – whether you are a salaried taxpayer or a businessman – must have already paid taxes in time but doesn’t mean you don’t need to file tax returns? Just paying taxes is not enough. The law also requires you to file your taxes if your income exceeds the basic exemption limit of Rs. 2,50,000 irrespective of the fact whether your income garners payable tax or not.
Your credit card payment or investments in mutual funds or shares or buying a property beyond the specified limit makes you liable to file tax returns. The law requires your to file your taxes by the due date which is July 31 every year for the salaried person and for those whose accounts don’t need to be audited.
But what happens if you forget to file your tax returns?
There is no need to panic -when it comes to filing tax returns, the law is not too stringent because if you have already paid all the taxes due on your total income. The tax has been accordingly deposited with the government, so there’s no need to worry. Take for example, the last date to file tax returns for the financial year 2015-16 was July 31, 2016, which was later extended to August 5, 2016. So, if you didn’t file your tax returns in the last financial year, you can still do it without any additional penalty or interest provided there is no outstanding tax liability. Unpaid tax incurs a penalty of interest under section 234A/ B & C.
What is the governing rule?
The governing rule provides the leeway to file tax returns within a period of two years from the end of the financial year in question. So you can file your tax returns for the financial year 2014-15 (i.e. Assessment Year 2015-16) till March 31, 2017, and for Financial year 2015-16 (i.e. Assessment Year 2016-17) up to March 31, 2018.
Why is it so important to file tax returns on time?
Apart form incurring interest penalty on outstanding taxes under section 234A/B & C, you will not be allowed to carry forward your business & capital losses to the next assessment years.
Union Budget 2017 and the new penalty for delayed filing
Currently there is a provision under section 271F, which levies a penalty of Rs 5,000 for failing to file income tax returns within one year of the end of the relevant financial year. However, this is more of a discretionary penalty which was levied only in rare circumstances.
In the 2017 Budget, tax filers who have not filed their income tax returns on time, will now have to pay a penalty of up to Rs 10,000 as applicable from Assessment Year 2018-19. A new section 234F has been introduced in the income tax act (I-T Act) which provides for a fee for any delay in furnishing of your tax return in all the cases where the return haven’t been filed within the due dates as specified under section 139. There will be two set of penalties, first, a Rs 5,000 penalty in case the tax return is furnished after the due date but on or before December 31 for that assessment year and Rs 10,000 for any other case. However, the government has reduced the penalty amount to Rs 1,000 for small taxpayers whose total income does not exceed Rs 5 lakh.
2. Pay last instalment of your Advance Tax by March 15, 2017:
If you are a salaried employee, then taxes applicable on your salary income gets deducted by your employer. But if you have any other source of income other than the salary, like interest on fixed deposits or capital gains from the sale of a property or mutual funds, or shares or from rental income of your flat, then it is necessary to pay the taxes due on the additional income as per then advanced tax payment schedule. The deadline to pay the last instalment of the advance tax for the financial year 2017 is March 15, 2017. This also applies to any self-employed person or a businessman. Timely payments will ensure you’re free from interest penalties.
3. Make investments on or before 31st March 2017 for Tax Savings u/s 80C & other chapter via deductions:
If you haven’t exhausted the Section 80C limit of Rs 1.5 lakh or 80D limit for medical premiums on health insurance policies, you can still make these investments in Mutual funds ELSS or Life Term Plan or NPS according to your need and comprehensive tax and financial planning. However, it’s important not to forget to invest in these instruments to gain tax benefits immediately, depending on your tax slabs. Apart from that, these investments also provide bounty returns. You could also request your employer to give you any tax benefits by lowering the monthly TDS amount.