Filing tax returns before July 31: Who should worry?

If you fall under any of these six categories, you better file your income tax returns on or before July 31, 2014.

Lack of awareness among taxpayers is one of the main reasons for low level of compliance towards tax laws. The financial year is over (March 31, 2014) and time has come for some of the taxpayers to pay tax and file their returns.

The filing of income tax return is a legal obligation of every person whose total income during the previous year exceeds the maximum amount which is not chargeable to income tax under the provisions of I. T. Act, 1961.

The return should be furnished in the prescribed form on or before the due date(s). At present, there is an emphasis on self-compliance as per Section 139(1) of Income Tax Act, 1961.

Who all are required to file Income Tax Return before 31st July?

Section 139(1) defines the due date for filing the income tax return.

In case you fall in any of the categories mentioned below then you need to file your income tax returns on or before July 31:

a) Individual having income from salary or pension;

b) Income from other source like interest income;

c) Income from capital gains;

d) Income from house property and;

e) Income from person owning small business and not liable to get their accounts audited;

f) Assessee other than companies having a gross turnover (Gross turnover means the turnover inclusive of taxes i.e. either VAT/Service tax/Excise) below Rs 1 crore;

g) Professionals having gross receipts below Rs 25 lakh

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In case you fail to file your return by the due date as prescribed by law, you can still file your return of income by March 31, 2015 for the previous financial year but you will not be able to revise your return of income in case you notice any mistakes or errors in the return of income filed beyond the due date.

Moreover in case any amount is still payable as tax on your total income, you will have to pay penal interest on the amount of tax till you actually file the return.

So if you have not filed your return till date, get going and get your return filed and pay your taxes. Filing a return on time will help you keep away from tax implications especially if you have tax liability, carry forward losses and tax refund etc.

Though the tax laws give you a grace period if you file your return late, you also forgo some of your rights as a taxpayer.

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For one, you cannot modify your tax return if it has been filed after the due date. You also cannot carry forward any short-term or long-term losses if you have filed after the due date.

If return is filed after end of assessment year then assessing officer may impose penalty up to Rs 5000 under section 271F.

Interest Under section 234A @ 1 per cent per month is applicable on net outstanding tax due amount. Filing tax return is especially important if you intend to buy property.

In most states, registration of immovable property requires one to produce tax returns for the past three years.

Even if you don't have full details, file the original return before July 31 so that you don't lose out on the benefits mentioned earlier.

You can then file a revised return later with all the missing details.

Keep in mind that you can file a revised return only if the assessment has not been completed. To ensure this, it is best to file online.

Filing tax returns have been made extremely simple and easy in the past few years. Thus one must endeavour to file income tax return before July 31 to avoid missing out on exemptions being given by the IT department.