Couldn't file return? Don't panic

Those who had their tax deducted at source can file it till March 31, 2010

Author : Vivek Kaul/DNA

Content : The last date to file your income-tax return is just three days away. But if you are a salaried individual and can't file your return by July 31, don't worry. Because you still have a little less than two years — till March 31, 2010 — to do that.

The website of the income-tax department —www.incometaxindia.gov.in — points out that the return "may be furnished at any time before the expiry of two years from the end of the financial year in which the income was earned". For the income earned in the financial year 2007-08 (from April 1, 2007, to March 31, 2008), the belated return can be filed any time before March 31, 2010.

But there is one catch: this relaxation is applicable for only those whose tax has already been deducted at source and there is no outstanding liability.

Also, while you won't have to pay anything extra if the return if filed before March 31, 2009, the I-T department can slap a fine of Rs5,000 if it is filed after that.

What about those who have tax outstanding and do not pay that before July 31, 2008? Paying the tax late does come with a cost attached to it. "In terms of repercussions, a simple interest of 1% a month will be levied on any tax due," says Sandeep Shanbhag, Director, Wonderland Consultants, an investment and tax advisory firm. So for individuals who need to pay tax it makes sense to pay up before July 31 or they would have to pay an interest on the outstanding liability.

The Rs5,000 penalty can also be levied on individuals who choose to pay the outstanding tax and file the return after March 31, 2009. This will be over and above the 1% a month simple interest charged on the outstanding amount.

However, filing late returns may not be a good option for everyone, especially for individuals who suffer a business loss or capital loss. For them it is advisable to file their tax returns before July 31. "There is a drawback of not filing the tax return in time, if you have any business loss or capital loss (short-term or long-term), the same cannot be carried forward to claim a set-off against future income if the tax return is not filed in time," says Shanbhag.