Missed tax deadline? Here's how much PENALTY you'll pay

Lot of people miss the deadline every year due to lack of time or plain laziness. Did you miss it too? In case you have, do not worry. You can still file the belated return. As a taxpayer, you are likely to fall under one of these four categories.

The associated rules and implications are outlined below:

Case 1: No pending tax liability

Cases where all the taxes has been paid through TDS or advance tax and you don't owe any more to the tax department.

This is the safest situation. The income tax return for any assessment year can be filed till the end of that assessment year without any penalty. If it is filed after the end of the assessment year, there is a lump sum penalty of Rs 5,000.

For example, for the current assessment year 2011-12, the deadline for filing the return is July 31,2011. If you missed deadline then you can file the belated return till March 31, 2012 without any penalty. However, if the return is filed after March 31, 2012 then you will be subjected to a penalty of Rs 5,000 which is dependent upon the discretion of the assessing officer.

It has been noticed that the fine is usually not levied for online return filing.

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Case 2: Tax liability exists

This is the case where you still owe taxes to the goverment. It can happen due to many reasons. For example if you have income from other sources, you have worked in more than one company etc. In this case the basic rule remains same i.e. the income tax return for any assessment year can be filed till the end of that assessment year without any penalty.

You will be liable to pay a penalty of 1 per cent interest on the balance tax payable.

Let us understand this case with an example:

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Mr. X's tax liability (net tax payable) be Rs 70,000

TDS deducted by employer Rs 55,000

Advance/Self assessment tax paid be Rs 8,000

Balance tax payable by Mr. X is Rs 7,000 (70,000 - 55,000 - 8,000)

Suppose Mr. X files the return before the end of the assessment year on October 15, 2011 (i.e. before March 31, 2012). In this case Mr. X would be filing the return three months late. Tax Payable is 7,210 7,000 + (3 per cent of 7,000) .

Suppose Mr. X files the return after the end of the assessment year on July 18, 2012 (i.e. after March 31, 2012).

In this case, he will liable to a penalty of Rs 5,000 along with the penalty of 1 per cent on balance tax payable for 12 months (August 2011 to July 2012).

Tax payable, in this case, is Rs 12,840 7,000 + (12 per cent of 7,000) + 5,000

These rules come under section 234 and there can be multiple components of the interest depending on the actual dates of payment of advance taxes.

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Case 3: You have a tax refund

If you have any tax refund then you can file the return even after July 31 without any issue. The only disadvantage will be that your return may be processed late which may delay the refund process.
 
Case 4: You have carry forward losses

Irrespective of the fact whether you have tax liability or not, if you do file your income tax return by deadline (i.e. July 31) then you cannot carry forward the loss of that year. Thus you would lose the benefit of set off these losses against the income of next year.

However, there is an exception to this rule i.e. this rule doesn't apply to loss from house property, which means this loss can be carried forward even if the income tax return is filed after the deadline.

Important points

• Belated return (Return filed after the due date) cannot be revised
• Some of the deductions u/s 80 is not available for late return

Conclusion

Filing a return on time is always a good habit which will keep you away from tax implications especially when you have tax liability, carry forward losses and tax refund etc. However, if you have missed filing the return, go ahead and file your return right away.