What is a belated income tax return and what are its consequences

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If you think you will miss the extended income tax return filing deadline also, there’s still a chance for you to file your return. However, there are certain points you need to understand before you make up your mind to avail this last chance. Returns filed after the due date are referred to as ‘Belated Returns’. Below is your primer on filing belated tax returns:

What is belated income tax return?
If an individual fails to file the income tax return by the due date, then as per section 139(4) of the income tax he can file a belated return.

What is the deadline to file belated ITR?
A belated return can be filed at any time before the end of the relevant assessment year or before completion of assessment, whichever is earlier. If you are filing a belated return for FY16-17 then you need to fill the applicable ITRs as notified for this FY only and not for any previous or later FY. The relevant assessment year for a financial year is the immediately succeeding financial year.

This means that you can file belated return for FY2016-17 by March 31, 2018 i.e. before the end of of the current assessment year (AY2017-18).

Can you revise belated tax returns?
Yes, I-T return for the FY 2016-17 and onwards filed under section 139(4), which is belated tax return can be revised. However, belated returns filed for previous financial years cannot be revised because the income tax law for this was changed from FY 2016-17 onwards.

Is there a penalty?
No, the penalty for filing income tax return after due date is only applicable from FY 2017-18. The government has introduced a maximum late fee of Rs 10,000 for delayed filing of income tax return by individuals in the last budget presented in February this year. However, this fee is applicable with effect from April 1, 2018 and will not apply for returns filed for FY2016-17 for which the deadline as of now is August 5, 2017.

If there’s no penalty then what do I stand to lose if I file belated returns?
You stand to lose certain benefits for not adhering to the income tax filing deadline

 

• Cannot carry forward loss
If you file a belated return you cannot carry forward losses (except loss from house property). Losses under the following heads of income: Income from business and profession including speculation business, capital gains, and income from other sources cannot be carried forward in case a belated return is filed by the tax payer. The return filer will not be allowed to carry forward these losses even if all taxes have been paid in time if the return is belated.

• Levy of interest under section
If you have any unpaid tax liability, filing your return after the due date would result in a levy of penal interest on the unpaid tax calculated from the due date of filing the return till the actual date of filing. But if no tax is payable, the taxpayer won’t be liable to pay this interest on unpaid tax due to the belated filing for FY16-17 only. However, if the income tax department on assessing your return raises demand for additional tax payment then you would have to pay penal interest on that tax as well as the additional tax.

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