Missed the July 31 deadline for filing your income tax return? Never mind. File it now, it’s better late than never. The Income Tax department is lenient and gives us extra time to file belated returns. The grace period is ‘one year from the end of the relevant assessment year’. Here’s an example. For the year ended March 2014, the assessment year ends on March 2015 and one year from this means March 2016. So income tax returns for the year ended March 2014 can be filed up to March 2016. And if you have already paid all your tax dues, a belated return will not pinch you financially, because there’s no interest or penalty. But that’s only if you file the return by the end of the assessment year, which would be March 2015 in the above example.

Cost of delay
So why all the fuss about the ‘due date’ of July 31? Delays in tax return filing, while they may be condoned, have many disadvantages. One, if you have tax dues to settle, a belated return will mean extra interest payment. The interest on a delayed return is calculated at 1 per cent for each month of delay (a partial month is also considered as a full month). Suppose your tax dues for the year ended March 2014 are ?20,000 and you file your return on December 15 this year. In such a situation, you will be charged interest at 1 per cent for five months (from August to December) – this works out to ?1,000. This interest on a delayed return is in addition to the interest on delayed tax payment. Next, though you have time till March 2016 to file the tax return, if you do so after March 2015, the income tax officer, at his discretion, can penalise you ?5,000.

Also, if you have paid excess tax and claim a refund, a belated return will not only mean a delayed refund, but will also fetch you interest for a shorter period. In case of a belated return, interest on your refund is calculated at 0.5 per cent for each month after the month in which the return is filed. But if a return is filed on time, the interest is calculated from the beginning of the assessment year (April).

Say you file the 2013-14 return in December 2014 and claim a refund of ?10,000. If the refund is paid in May 2015, you get interest on the refund only for six months (December 2014 to May 2015) due to the delayed filing. Had you filed the return on time before July 31, you would have got interest on your refund for 14 months (April 2014 to May 2015).

Another trouble with a belated return is that unlike a return filed on time, it cannot be revised. So you have to be extra careful while filing a delayed return, since you will not be able to make changes later. This will pinch if you later find that you have declared excess income or not claimed all the allowances and deductions you are entitled to. Generally, the taxman allows you to carry forward and set off losses for eight years. But in the case of a belated return, you will not be able to claim this benefit on losses other than on house property and depreciation. So if you have losses from the sale of shares that you want to carry forward, sorry – you can’t do that on a belated return. Clearly, it pays to be punctual and file returns on or before the due date.

The sooner, the better
All said and done, even if you missed the July 31 bus, go ahead and file your returns as soon as possible. One, you can save interest on the belated return, start getting interest sooner if you claim a refund and avoid the penalty of ?5,000 you will have to pay if you delay beyond the end of the assessment year (March 2015).

Your tax return is a very important document. The taxman can come after you if you are supposed to file one, but don’t. Says Rakesh Nangia, Managing Partner, Nangia & Co, “In addition to penalty and interest, non-filing of income tax returns within the statutory deadline (two years) could result in prosecution.” Among its many uses, the tax return comes handy when you apply for loans or for visas to go to a foreign country. So go ahead and keep your date with the taxman.