Even after the last date, you have the option of filing a belated return. However, in case of belated returns some of the benefits are not available to the tax assessees. And in addition to paying any unpaid tax, they may have to pay penalties and interest on any tax that had not been paid. Read more about belated returns here.

Filing belated tax returns
In the Union Budget of 2016, the deadline for filing belated returns was reduced to 1 year. Before that, the deadline for filing belated return was 2 years from end of the relevant financial year.

As per the Union Budget 2016, effective from 1 April 2017, “A belated return can be filed at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier,” said Sheetal Bhatia, assistant manager-direct tax practice, International Business Advisors.

This means that you can file returns for the 2016-17 fiscal till 31 March 2018, and not beyond that. Before the 2016 Union Budget changed the rules relating to belated returns, you could have filed it till 31 March 2019.

However, if you have not filed your return for the 2015-16 fiscal either, then you have time till 31 March 2018 to file the return for it. You get this window of one more year because the amendment in the tax laws came into effect from the assessment year 2017-18. For years before that, the window of 2 years continues to be available

Limitations of belated returns
If you file a belated return, you may not be able to avail some benefits that are available only if you file your return before the last date.

Above all, you would not be able to carry forward certain losses to the subsequent years for setoff.

For instance, capital losses can be carried forward for the next 7 assessment years, from the end of the relevant one and can be adjusted against gains during these years, but only if the tax return is filed by the last date.

“If the person files a belated return, then losses (other than loss under ‘Income from house property’) cannot be carried forward,” said Bhatia.

Also, if any tax refund is due to you and you file the tax return in time, you can earn interest on refund claim, that is, the excess tax paid on your income during the year.

This is provided for in the section 244A of Income Tax Act, 1961. However, in case of belated returns, you may lose the interest that would be due on the refund amount.

Interest and penalties
In case you are required to pay additional tax on your income, after taking into account advance tax paid and tax deducted at source (TDS), then you are required to pay penal interest on the due taxes. “First, you will have to continue paying interest at the rate of 1% a month, under section 234B, on any taxes remaining at the end of the financial year. This interest will continue till you discharge all due taxes,” said Vaibhav Sankla, managing director, H&R Block India. For instance, if you had to pay additional tax of Rs25,000 on your income as on 31 March, you will be charged Rs250 each month till you pay the tax along with the interest.

You could incur penalties even if you pay all your taxes before last date for filing returns, but did not file the tax return. “In case you had any tax due on 31 March of the financial year, then you will be liable to pay an additional interest under section 234A at the rate of 1% per month on that amount, starting from 1 August of the relevant assessment year until you file the return,” said Sankla.

Apart from the interest to be paid on due taxes, you may also need to pay penalties for delay in filing the return, under section 271F of the Act. As of now, the penalty is Rs5,000 for delay in filing income tax returns and the decision to impose it depends on the discretion of the assessing officer.

However, from next assessment year, 2018-19, there will be compulsory penalty for delays in filing the tax return. As amended in the Union Budget 2017, “If you fail to file taxes by the due date...then you will be liable to pay a late filing fee of Rs5,000, which will be compulsory,” said Sankla. Further, “If you file taxes beyond 31 December, then this late filing fees will increase to Rs10,000,” he added.

In extreme cases, in which a taxpayer willfully delays filing tax returns, there are provisions for higher penalties and even imprisonment (under section 276CC of the Act).

Therefore, it is wise to not only file the tax returns, but to do so within the due dates. The process of filing belated income tax return is the same as filing the return by the last date.