I have come across several cases where the people have not filed their income tax returns on the 31st of July. They keep asking is it necessary to file ITR? What to Do now? How to go about it?
Now lets see if I can explain this, firstly YES it is necessary to file your income tax returns if you income is above 1.5 Lakhs and 1.85 lakhs respectively for men and women. And as per Section 234(A, B, C) of the income tax act, Anyone who has some tax liability but has failed to file returns will be required to pay 1 percent of the total tax liability every month till the time tax return is filed.
Now comes the big question what to do now, well let’s see…
1. All your tax liability has been deducted at source and you have Form 16 issued by your income source for example your employer then you can file your returns till March 31 of the next year (eg. - Mar 31 2010 for this year) without any penalty. However if you miss this deadline then you have to pay a fine of Rs. 5000/-.
2. You still have tax to be paid, and then you will be charged a penalty of 1 percent per month till the time you pay it. For Example you had to pay an income tax of Rs. 3000/- as on 31st March 2009 but some how you missed paying it then you can do so by paying a penalty of 1 percent per month i.e. Rs. 30/- till you pay the tax. So if you pay the tax on 31st September 2009 then your penalty will be of Rs. 60/- for 2 months (Calculated from 31st July 2009), which can be paid. And you can file your tax return by 31st March 2010.
3. If you forget to file your returns before the end of the Assessment year i.e. March 2010 for this year, then you will have to add another Rs 5000/- as penalty. For example if you file your returns in May 2010 for the above example, then your total tax payable will be Rs. 3000/- plus Rs. 5000/- (Penalty) plus Rs. 300/-(Interest).
Then there is the question of losses. Basically if you have faced some major loss in your business or sale of shares, which you want to carry forward to be set off in later years, then filing the income tax returns is extremely necessary. And do not forget that filing of Income tax return is not just an obligation but also a very important proof of income, which can be used for getting bank loans or applying for foreign travel Visas etc.
It is better late then never, so go ahead and just file your returns.
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