Come July, the Income Tax season will be in full swing. The I-T department requires assesses (anyone liable to pay tax) to file their returns for the previous financial year (2017-2018) by July 31, 2018. Usually, if you miss the deadline for whatever reason, you can file a ‘belated’ return. However, starting this year, there will be a hefty late fee that you will have to pay if you don’t file your return before July 31.
Hefty Fees for Late Returns
If you file your return after July 31, but before December 31, you will be required to pay Rs. 5,000/- as belated fee, and if you file your return after December 31, the late fee becomes Rs. 10,000. If your income is below Rs.5,00,000 a year, the late fee is capped at Rs.1,000 irrespective of when you file the return. Bear in mind though, that for the Financial Year 2017-18 (Assessment Year 2018-19), you cannot file a belated return after March 31, 2019.
The Advantage of Filing on Time
Apart from the fact that you won’t have to pay any penalties, filing on time also makes you eligible for interest in case you have an income tax refund. You are eligible to receive interest at the rate of 6% per annum on your refund if it arises out of TDS from the 1st of April of the Assessment Year to the date your refund is processed. If you file your return belatedly, on the other hand, your refund won’t be eligible for interest. If you are due to pay taxes, you will also incur an additional interest under section 234 A at the rate of 1% per month for every month that you delay filing (even one day is counted as a month!)
Your Form 16 is NOT your Income Tax Return
Your Form 16 is a statement from your employer that declares the tax that they have paid on your behalf. It does not mean that your Income Tax Return has been filed. It is simply a document that provides evidence of the tax amount that is lying in your name. Now, while the Form 16 is taken to be a valid proof of Income Tax paid in a number of places, there have been instances where it is rejected by banks or by Consulate offices (for visa purposes). So, it is recommended that you file your return anyway, just to be on the safer side.
If you’re a freelancer, you might also have tax lying in your name as evidenced by the Form 16As which your clients may have sent you. Once again, they are merely evidencing documents and not an income tax return.
But what if I don’t have an Income?
If you have a working PAN number (you should!), it is recommended that you file a ‘NIL’ Income Tax Return anyway. The reason I insist that you file one is because income tax returns are important documents that you will need for travel, to get a loan, for your child’s school admission or just about anything else. Women are, for most part, categorized as ‘dependents’ across many spheres which in turn makes the process of breaking out (if necessary), that much harder. Having income tax returns filed in your name is one step in establishing yourself as an independent, law-abiding person, apart from making yourself eligible for several services and facilities in your own capacity. Now that you know that skipping on filing returns could become a costly mistake, how do you go about filing them? Next week on Rupee Rani, I’ll tell you everything you need to know to make return filing a hassle free process.
Rupee Rani is a weekly column on finance for women. Write to us with your queries at rupeerani@thenewsminute.com
Note: An error in the piece has been rectified.