You can file your tax return even after the due date

Many taxpayers seem to be under the impression that having a PAN makes it mandatory to file the tax return. The issue has especially come up ever since PAN was made compulsory for investing in mutual funds. There are many who feel that now that they have been allotted a PAN, return filing would also be a must, no matter that they don’t have any taxable income.

On the other hand, there are those who feel that as long as their income has been subject to TDS, they have no further obligation as far as the taxman is concerned. In other words, they feel that since the income is already subjected to tax, there is no further action needed on their part.

Both are misconceptions. Though a taxpayer needs to have a PAN to file the tax return, the reverse is not true. And similarly, even though TDS has been deducted on one’s income, filing a tax return could be obligatory.

Basically the rule is that if one earns an income above the basic exemption limit, it is obligatory on such a person to file his or her tax return.

For FY 12-13, the basic exemption limit is Rs. 2 lakh for men and women and Rs. 5 lakh for senior citizens respectively. So, if your income is lower, irrespective of whether you have been allotted a PAN or not, you need not file a tax return. And if your income is higher, then irrespective of the tax deducted at source, you have to file your tax return. Note that income in this context is your gross income i.e. before claiming any deduction.

Advance Tax

All taxable income including capital gains is liable for payment of advance tax. Advance tax is mandatorily payable where the tax payable for the financial year works out to Rs. 10,000 or more. The above table contains the due dates for payment of advance tax.

For the purposes of payment of this tax, taxpayers have to estimate their income for the year and pay the required installment of advance tax (net of TDS already deducted) by the due date specified. Now, as we know, the first two due dates have already passed and the last due date of March 15th is fast approaching. For this, a taxpayer can revise the remaining installment of advance tax in accordance with the revised estimate of income earned for the year. If advance tax is not paid on time, by way of a penalty, broadly simple interest @2% p.m is payable on the short-fall.

Belated Return

As most readers must be aware, the last date for filing the tax return is July 31st. So what happens, if for any reason, you are unable to file your return in time? Even then, there is no cause to worry as such – the law allows you to file a belated return at any time before the end of one year from the end of the relevant assessment year. In other words, if you file a return after July 31st, it will be ter med as a belated return and the same can be submitted anytime up to 31st of March, 2015.

In terms of repercussions, an interest of 1% per month will be levied on any tax due. Also, the tax official has the option of imposing a penalty of Rs. 5,000 on account of the late submission. So say you are a salaried employee who has not filed his or her return in time, however, the tax due from you has already been deducted at source in the usual course. In this case, the maximum downside even for a late filing would be the Rs. 5,000 penalty amount. Since the tax due from you has already been paid (by way of the TDS), there would be no liability on account of interest. Re- member, interest is levied only if you owe any tax to the government.

However, there is yet another drawback of not filing the tax return in time. If you have any business loss or capital loss (short-ter m or long-term), the same cannot be carried forward for set-off against future income, if the tax return is not filed in time.

So all in all, it is always advisable to submit your tax return in time --- however, if you cannot do so due to unavoidable circumstances, then the consequences are as detailed above.

Revised Return

There is yet another concept known as ‘revised return’ As the name suggests, if you were to discover any omission or wrong treatment of any income or deduction or a wrong statement in your originally filed return, then within one year from the end of the relevant assessment year, you may file a revised return. Therefore, just like in the case of a belated return, you have time till March 31st, 2015 for filing the revised return.

In ter ms of a real life example, Mr. Mehta (name changed upon request) had originally filed his return for FY 11-12 well within the time limit of 31st July, 2012. However, later on somewhere around December 2012, while making his advance tax calculations, he realized that he had erroneously claimed an amount of Rs. 2 lakh as tax exempt. What he thought was the maturity amount from an equity mutual fund was in fact interest income from an old bond investment. After paying the requisite amount of tax with interest due thereon, Mr. Desai went on to file a revised return correcting the error in the previously filed return.

Again note that a revised return can be filed if and only if the original return has been submitted in time. (The authors may be contacted at wonderlandconsultants@yahoo.com)