Scenario 1# You do not have outstanding tax liability

In case you have already paid your taxes before 31 March, 2009, but could not file the return within the due date, you may file a return at any time before the end of one year from the relevant assessment year, simply put; for the financial year 2008-09 return can be filed at any time before 31st March 2011, however you may invite a tax penalty of Rs 5,000 u/s 271F of income tax act even if all your taxes have been paid if the same return is furnished after 31st March, 2010.

Scenario 2# You do have some Outstanding Tax liability

If you do need to pay any balance tax, there is some financial implication. The basic principle remains the same: The income tax return for a given assessment year can be filed any time till the end of that assessment year without any penalty. If it is filed after the end of the assessment year, there may be a lump-sum penalty of Rs. 5,000. On top of this, there is a penalty of 1% per month on the net tax payable u/s 234A. Example: Say, your income tax liability for the year is Rs. 40,000. You have TDS (Tax Deducted at Source) of Rs. 20,000, and you have paid an advance tax of Rs. 6,000. Thus, the remaining tax payable by you is: Net Tax Payable = Income tax liability for the year TDS Advance tax paid = Rs. 40,000 Rs. 20,000 Rs. 6,000 = Rs. 14,000. [ad#link-unit] Now there are two cases, which we have to consider Case 1: File income tax return before the end of assessment year Say you file your income tax return on 17th September, 2009. In this case, you would be filing your return 2 months late (partial months are considered as full months). Final Amount = Net Tax Payable + Interest for 2 months at the rate of 1% per month Amount payable , = Rs. 14,000 + (2% of Rs. 14,000) = Rs. 14,000 + Rs. 280 = Rs. 14,280 Case 2: File income tax return after the end of assessment year

Say you file your income tax return on 4th June, 2010. In this case, you would be filing your return 11 months late (partial months are considered as full months). On top of this, you would be filing the income tax return after the end of the assessment year for which you are filing the return. So, in this case, Final Amount = Net Tax Payable + Interest for 11 months at the rate of 1% per month + Lump sum penalty of Rs. 5,000 = Rs. 14,000 + (11% of Rs. 14,000) + Rs. 5,000 = Rs. 14,000 + Rs. 1540 + Rs. 5,000 = Rs. 20540 Save some tax by understanding Income clubbing provisions of Income tax

Additional Scenario
You have losses that you need to carry forward. This applies irrespective of whether you have any net tax payable or not. If you do not file the income tax return for a year by the due date, a loss for that year can not be carried forward. The only exception to this rule is loss from house property this loss can be carried forward even if the IT return is not filed in time. Thus, if you have a loss from any of the heads of income (except for the head Income from house property) and you file your income tax return late, you would not be able to carry forward your losses. Thus, you would lose the benefit of set off of these losses against the income of the next year.

Conclusion
Not filing a return on time does have financial implications, especially if you have a net income tax payable and/or if you have losses to be carried forward. This can really hurt especially if the losses to be carried forward are significant. Therefore, your best option is to ensure that you file the income tax return by the deadline.Better late than never is the best policy when it comes to income tax return filing. Notes from Manish:

Disadvantages of filing a late return

As per Income Tax Department of India : Aa tax return may be furnished any time before the expiry of two years from the end of the financial year in which the income was earned. This means that if you earned your income during FY 2009-10, you may file a belated return anytime before 31st March, 2012 . But there are some disadvantages if you dont file your returns on time . They are

You will not be able to carry forward your Business loss (Speculation or otherwise) , capital loss , loss due to owning and maintaining of race horses.

Loss of Interest on refund : You may loose interest on refund u/s 244A specially in case if you are claiming a Major amount as refund. You cannot revise your return.

NOTE: Dear Friends, the above article does not mean to encourage people for filing late return but only to make taxpayers aware about the provision of IT act and help them taking informed decision.

Income Range

Upto Rs. 2,00,000 Rs. 2,00,001 to Rs. 2,50,000 Rs. 2,50,001 to Rs. 5,00,000

Women (Below 60 years of Very Senior Senior Citizens General age) Citizens (Men and Women (non-senior (This category is abolished (Men and above 60 years of citizens) from this year and is thus is Women age), but below 80 Category same as that of General above 80 years Category years of age) Nil Nil Nil Nil 10% 10% 10% 10% 20% 30% Nil 10% 20% 30% Nil Nil 20% 30%

Rs. 5,00,001 to Rs. 10,00,000 20% Above Rs. 10,00,000 30%

For finanacial year 2011-12 TAX Basic Exemption 10% tax 20% tax 30% tax MEN WOMEN SENIOR CITIZEN 250000 250001 to 500000 500001 to 800000 above 800000

180000 190000 180001 to 190001 to 500000 500000 500001 to 500001 to 800000 800000 above 800000 above 800000 For finanacial year 2010-11

Basic Exemption

160000 190000 240000 160001 to 190001 to 240001 to 10% tax 500000 500000 500000 500001 to 500001 to 500001 to 20% tax 800000 800000 800000 30% tax above 800000 above 800000 above 800000 For finanacial year 2009-10 Basic Exemption 160000 190000 240000 160001 to 190001 to 240001 to 10% tax 300000 300000 300000 300001 to 300001 to 300001 to 20% tax 500000 500000 500000 30% tax above 500000 above 500000 above 500000 For finanacial year 2008-09 Basic Exemption 150000 180000 225000 150001 to 180001 to 225001 to 10% tax 300000 300000 300000 300001 to 300001 to 300001 to 20% tax 500000 500000 500000 above 500000 above 500000 above 500000 For finanacial year 2007-08 Basic Exemption 110000 145000 195000 110001 to 145001 to 10% tax nil 150000 150000 150001 to 150001 to 195001 to 20% tax 250000 250000 250000 30% tax above 250000 above 250000 above 250000 income is note:- there is a greater than 10 10% surcharge if lakh For finanacial year 2006-07 and 2005-06 Basic Exemption 100000 135000 185000 100001 to 135001 to 10% tax nil 150000 150000 150001 to 150001 to 185001 to 20% tax 250000 250000 250000 30% tax above 250000 above 250000 above 250000 For finanacial year 2004-05 and 2003-02 Basic Exemption 50000 50000 50000 10% tax 50001 to 60000 50001 to 60000 50001 to 60000 20% tax 60001 to 150000 60001 to 150000 60001 to 150000

30% tax

Basic Exemption 10% tax 20% tax 30% tax

Basic Exemption 10% tax 20% tax 30% tax

Basic Exemption 10% tax 20% tax 30% tax

above 150000 above 150000 if income is note:- there is a greater than 8.5 10% surcharge lakh For finanacial year 2002-03 50000 50000 50000 50001 to 60000 50001 to 60000 50001 to 60000 60001 to 150000 60001 to 150000 60001 to 150000 above 150000 above 150000 above 150000 if income is note:- there is a greater than 5% surcharge 60000. For finanacial year 2001-02 50000 50000 50000 50001 to 60000 50001 to 60000 50001 to 60000 60001 to 150000 60001 to 150000 60001 to 150000 above 150000 above 150000 above 150000 if income is note:- there is a greater than 2% surcharge 60000. For finanacial year 2000-01 50000 50000 50000 50001 to 60000 50001 to 60000 50001 to 60000 60001 to 150000 60001 to 150000 60001 to 150000 above 150000 above 150000 above 150000 if income is note:- there is a greater than 12% surcharge 60000. if income>150000 surcharge is 17%

above 150000

Saving Scheme

Sec. under which Tax Benefit available

Return

Tax benefits for earnings (i.e. interest received / dividend received) Taxable

Lock in Period and other Remarks

National Saving Certificates - ( NSC scheme )

8.50% for VIII Series 5 Section 80C Year NSCs; and 8.80%

5 years (reduced wef Dec 2011 from 6 years to 5 years for new investments). The yield

for 10 year NSCs for FY 2013-14

on these NSCs will now be revised every year and will be 25 bps above the 5 year government bond yields 3 years

Varies from Equity Linked Savings year to Dividend is tax Section 80C Schemes (ELSS) year (Market free linked) Varies from Varies from Life Insurance Policies Section 80C scheme to year to year scheme Varies from Unit Linked Insurance Varies from Section 80C scheme to Plan (ULIP) year to year scheme Varies from issue to issue. These were around 8%+ in Dec 2011. These have lost their charm Infrastructure Bonds Section 80C as Taxable Additional Tax rebate of Rs 20,000 is NOT given now from FY 2012-13 onwards. Contribution to EPF / Section 80C 8.50% GPF / Voluntary PF

Varies from scheme to scheme Varies from scheme to scheme (15 to 20 years)

3 to 5 years

Till retirement (loans are Interest earned permitted only after 5 is tax free years) Earnings are tax Insurance Policies Section 80C 6 to 7% only free in most of Locked till maturity the cases Market Earnngs are tax Partiail withdrawal ULIPS Section 80C linked free allowed 15 years and extendable. Withdrawals Decreased to Public Provident Fund Interest earned allowed after 7 Section 80C 8.70% for (PPF) is tax free years. Yield on PPF will FY 2013--14 vary and will be fixed at 25 basis point above the

NPS

Section 80C

Market Linked

10 year government bonds. Interest earned Withdrawal not permitted is tax free before maturity

Tuition Fees including admission fees or college fees paid for Section 80C full time education of any two children of the assessee. Repayment of Housing Section 80C Loan (Principal)

Not applicable

Not applicable Not applicable

Not Not applicable Not applicable applicable Varies from bank to bank Bank Fixed Deposits Section 80C (around Nil 5 Years 5 Years 8.00% 9.00%) As per the guidelines issued in December 2011, Senior Citizens Savings 9.20% for there will be spread of Scheme 2004 (from Section 80C Taxable FY 2013-14 100 basis points above the financial year 2007-08) 5 year bonds yields for this scheme.
Post Office Time Deposit Account (from financial 2007-08)

Section 80C