The last date to file your income tax returns has been extended, and this calls for swift action rather than kicking back to relax. With barely two days left before the new deadline, you need to move fast if you wish to avoid the last minute rush as well as some inconvenience.
Although no harsh legal action will entail if you fail to file your income tax returns on time but there are plenty punitive actions that can make things difficult for you in days to come. Here's a look at what they might be:
Pay for your delays
Firstly, the defaulter might be fined by the income tax officer to the tune of Rs 5,000 under Section 271F for delay in filing income tax return. This stipulation comes into play if the taxpayer does not have any tax liability and fails to file his or her delayed return by March 31 of the assessment year.
In extreme cases, where the officer believes that the delay was intentional, the defaulter may be sentenced to imprisonment for a period anywhere between three months to two years (if the tax is less than Rs 25 lakh) or 6 months to 7 years (if the tax exceeds Rs 25 lakh).
If there are tax liabilities though, then the defaulter will have to pay the tax owed along with one per cent monthly interest for every month delayed.
No helping hand with losses
The income tax department allows losses suffered during trading stocks to be carried forward for eight years on grounds considering F&O trade a non-speculative business. This facility is not offered, though, to taxpayers who fail to file their income tax return on time.
Even more losses on interest
The income tax department pays interest to taxpayers at six per cent per annum on delay in paying refunds to them. This interest is calculated with the beginning of the financial year. So by paying late, you miss out on interest of a few months you could have incurred otherwise by paying on time.
Difficulties in getting loans
Commercial banks ask for records of your previous income tax returns while delegating loans. This is so because these I-T returns are basically records of your finances and helps you in making your case before the banks while applying for a loan.
As this a norm across banks, it will be prudent to be on time with filing your income tax returns.
Foreign trips are a no-go
Travellers going to foreign countries are required to submit records of their income tax returns for the past three years. This again acts as a financial benchmark for visa authorities to ensure that you can afford your stay abroad and will not be a burden on the authorities.
Thus, delay in I-T returns may very well upset a vacation plan, or worse, mess up an important business trip.