Many people fail to file their income tax return on time despite extension of deadline. This year the government extended the tax-filing deadline to August 5, though July 31 typically is the last date.

Individuals whose income in a financial year exceeds more than the exempted limit of Rs 2.5 lakh are liable to file income tax return. Many people think that as the TDS (tax deducted at source) has been deducted so there is no need to file tax return. But it's not true.

So if you missed the deadline, you can file a belated return. It can be filed by an assessee within two years from the end of the financial year to which this return pertains to. For example, for filing return for the year 2015-16, the next year - 2016-17- is the assessment year. Therefore, you can file return till March 2018.

The rule for filing belated return has been reduced to one year in this year's Budget. So for the financial year 2016-17, belated return could only be filed till March 2018.

However, if you file a belated return and income tax of Rs 10,000 or more is due, you will have to pay interest at the rate of one per cent (simple interest) per month for each month of delay till you pay the tax.

If the assessee even fails to file a belated return within the stipulated time, the tax officer can levy penalty of Rs 5,000 on his discretion.

An assessee forgoes certain benefits in case of late filing of return. You can't carry forward your capital losses to set off with future capital gains. It is only possible to carry forward capital losses if you file the return within the deadline.

If there is a delay from the tax department in sending you a refund, the tax department is liable to pay interest on the refund from the day tax refund becomes due. But in case you file the return late, interest will only be paid from the date of filing of tax return, till the refund is paid to you. You will not get any interest for the period of delay.