Contrary to the popular notion, missing your tax deadline of August 31 for the assessment year 2014-15, will not be the end of world. The income tax department is benevolent enough to give a grace period of sorts of not 11 days but 11 months.  You can file a ‘belated return’ until March 31 of the subsequent year but beyond that the taxman draws a line and stuff starts hitting the fan. So sit back and relax and forget about filing your return! There’s always next time (at least 11 months more).

Or, you can file your return on time and get done with something that needs to be done anyway and improve chances of keeping your costs minimum and in the process not attracting any unwanted attention from the law.

Just because you have the option to delay IT returns doesn’t mean you have to use it. “A stitch in time saves nine,” goes the old adage and rightly so.  The first and biggest advantage of filing your tax return on time is that you get room for filing a revised return in case you make a blooper in your original return. However, if you’re already filing a belated return, there would be no room of filing a revised return as the time limit for filing a revised return is one year from the date of filing of the original return.

Another advantage of minding the deadline is to be able to take advantage of carry forward and setting off of losses in the ‘capital gains’ section next year.  Simply put, in a given assessment year losses incurred from a particular source of income can be offset against gains from another (subject to conditions) and if this income in the particular year falls short of fully offsetting the losses, then taxpayer can carry forward the unadjusted loss for adjustment in the next year. This cannot be done in case of a belated return.

“Many times it may happen that after making intra-head and inter-head adjustments, still the loss remains unadjusted. Such unadjusted loss can be carried forward to next year for adjustment against subsequent year(s)’ income. Separate provisions have been framed under the Income-tax Law for carry forward of loss under different heads of income (refer next FAQ for more provisions in this regard),” says the IT department website on carry forward and adjustment of losses.  

Another benefit of filing taxes within the due date is that the taxpayer is eligible to get interest on income tax refunds.

Those with pending tax arrears might want to file the return at the earliest or they have to be pay an interest of 1 per cent per month on pending tax until in-case of belated return and a penalty of Rs 5,000 under the section 271F. The penalty of Rs 5,000 under section 21F can be levied even if there is no further tax payable when belated return is filed. Download the tax credit statement of Form 26AS in order to know the tax deducted at source (TDS) from your income.

It is therefore recommended that you file your tax returns before the due date of the current assessment year or end up increasing the net cost of filing taxes. Paying interest on taxes to be paid to the government and that too at the rate of 1 percent per month is a rather costly affair and an avoidable one. Filing taxes in not only legal but a duty of each citizen for the progress of the nation and help government is providing services such as policing which are more or less non-existent in country as big as ours in this day and age. 

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