Is Income Tax Return Filing Mandatory?
- March 7, 2019
- By, CA.Vishranth.B.L
The following are the circumstances that will arise if you do not file your income tax returns;
- Penalty: If the income tax return is filed after the due date but before the 31st of December,
a fine of Rs. 5000 is payable in addition to the taxes that such a person is required to pay. In
other cases, i.e. when the income tax return is filed on or after 1st January, the fine that is
levied will be Rs. 10000. However, in cases where the income tax return of taxpayers does
not exceed Rs. 5 lakhs, the fees payable is Rs. 1000
- Opportunity of revising your return: If an error is committed while filling the Income Tax
Return, one can file a revised Income Tax Return. Earlier, taxpayers had the luxury of filling a
revised income tax return within a period of two years, however now that time period has
been reduced to a year. Thus, the earlier the income tax returns are filled, more the time
one would have to revise the returns if required.
- Interest on Tax Amount: In situations in which Income tax returns are not filed till the due
date, interest is levied in the form of a penalty at the rate of 1% per month including the
month in which the payment is finally made. This tax is payable after deducting the tax
deducted at source, tax collected at source, advance tax and other tax credits that are
available under the provisions of the Income Tax Act
- No Carry Forward of Losses: If income tax returns are not filed before the due date then the
person filing the income tax return after the due date will not be permitted to carry forward
any losses which are normally allowed under the head of “profits and gains of business or
profession” or “capital gains”. However, unabsorbed depreciation is permitted to be carried
forward under the head of “income from house property”
- Hindrances in getting Bank Loans: Banks consider the Income Tax Returns of the past three
years when you have to apply for a loan. Thus, during the time of loan application, issues
could arise because of filing your Income Tax Returns late.
- Notices from Income Tax Department: If you have carried out high value transactions in cash
or banking modes and have not filed your returns, the income tax department may send you
notices for non-disclosure of transactions through Income Tax Returns.