Why you should not be worried about filing of returns by 31st July.

It is a common perception that if an income tax return is not filed within due date, the IT dept will impose some penalty. Therefore many people who can file even after 31st July due date, without any repercussion , rush to file return by 31st July. Every year there is is great rush to file return by 31st July.

So,when can you file return even after 31st July without any repercussion ?

You can file return after 31st July if

1.All taxes have been paid by you as advance tax or deducted at source.

2.You have not incurred any loss. In case you have incurred any loss, then it is in your benefit to file your return by 31st July , If you file returns by due date then, in future when you make some profits, the loss of the previous years can be set off against the profit - so you  pay lesser taxes. However if you do not file by due date then you cannot offset your losses against your profits.

One disadvantage is that - if you file after the due date, then in case you notice any errors in your return filed, you cannot correct/modify the return ie you cannot revise the return.

For example, if you are a salaried person and all tax has been deducted at source and no tax is outstanding as on 31st March 2010 for income (salary and other income ) earned during FY 2009-10 i.eAsst. Yr 2010-11 who are supposed to file return by 31/7/2010 , can file return upto 31/3/2011 without any interest or penalty.

And , if you take risk of paying penalty of Rs 5000 for late filing , you can file return upto 31/3/2012! In rare cases has this penalty been imposed. This penalty will not be imposed if you have sufficient/satisfactory reason due to which you could not file your return.