Published Editorial

Missing income tax return deadline - what it means

July 2016

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The Financial Express

By

Anand Dhelia
Tax Director, People Advisory Services, EY India

While filing a tax return is essential, it is also important to ensure that the tax return is filed in time. The due date for filing an individual tax return (without tax audit) is the July 31st immediately following each financial year.

Filing a tax return within the due date has several benefits. If your return is filed in time, the tax laws permit you to revise that return subsequently in case there is any error in the original return or if any income or deduction has been omitted in it. Further, if a tax return is filed within the due date, losses under the head ‘Capital Gains’ or under the head ‘Profits and Gains from Business or Profession’, if any, can be carried forward and set off against the income from respective heads in the subsequent financial year/s.

While there is no cap on the number of revisions that may be done, there is a time limit prescribed for the revision of a tax return. A revised return can be filed within two years from the end of the relevant financial year or completion of assessment, whichever is earlier.

In case the tax return is not filed within the due date, one can still file a tax return within two years from the end of the relevant financial year or completion of assessment, whichever is earlier. Such returns are known as ‘belated’ tax returns. A belated return cannot be revised even if there are any errors or omissions. Further, the benefit of carry forward and set off of losses (other than loss from house property) would not be available.

While this has been the law existing until the current financial year (i.e., financial year 2015-16), certain amendments have been brought in, which are effective from the financial year 2016-17. As per these amendments, the time limit to file a belated tax return has been reduced to one year.

To give an example, the due date for filing of tax return for financial year 2015-16 is July 31, 2016. Further, a belated return or a revised return may be filed by March 31, 2018 or before completion of assessment, whichever is earlier. However, the belated return once filed, cannot be revised. This makes it imperative to file the tax return within the due date in case there are any losses to be carried forward.

Post the amendment in the tax laws, let’s say for financial year 2016-17, a belated tax return may be filed by March 31, 2018 and a revised return can be filed by March 31, 2019. This also means that if a tax return is not filed by March 31, 2018, it becomes time-barred and cannot be filed subsequently although the time limit for filing a revised return is March 31, 2019.

Given the benefits of filing a tax return in time and considering that at least 10 days are still left for the due date for filing of tax return for this year, it is preferable to ensure that the income tax return is filed within the due date of July 31, 2016. However, in case the tax return is not filed within the due date, one needs to ensure that the belated return is filed accurately with appropriate disclosures and deduction claims as the return cannot be revised later.