Tax laws allow late filing of return, you will lose out on certain benefits which are available to those who file returns on time. A person is allowed to file late income-tax return within two years but this rule was changed in this year’s Budget and the tenure of filing late return has been reduced to one year. This new rule will be applicable from April 2017.
Here are the benefits of filing tax returns on time:
1) Carry forward of losses: A taxpayer is allowed to carry forward losses to be adjusted with future capital gains for up to eight years. But this is allowed only if you file your tax return on time. In case you file a late return, you will not be allowed to carry forward any losses.
2) Delay in getting refund: If you have a tax demand outstanding, that is if you have paid excess tax, you can only claim it back by filing a tax return. Also, if there is a delay in sending you a refund, the tax department is liable to pay interest on the refund from the day tax refund becomes due. But in case you file the return late, interest will only be paid from the date of filing of tax return, till the refund is paid to you. You will not get any interest for the period of delay.
3) Proof of income: You tax return serves as a proof of your income. When you apply for a loan a bank may ask for your latest return as an income proof or if you are applying for a visa, your income tax returns may be required to ascertain your financial position.
4) Avoid penalties: If you delay filing your tax return, you will have to pay an interest at the rate of 1 per cent per month on the tax due till the date of filing of tax return. Also, if you fail to file your tax return, the tax department may levy a penalty of Rs 5,000. In case of wilful delays, there are provisions of higher penalties and even prosecution in some extreme cases.
You can file your ITR with ease via All India ITR.