Budget Focuses On Enhancing Tax Return Filing Compliance
In the backdrop of demonetisation, there was a high expectation that the Budget 2017-18 would encourage taxpayers with some additional tax relief. In line with this expectation, the Union Budget has proposed to reduce tax rates to 5 per cent at the initial slab of Rs 2.5 lakh to Rs 5 lakh providing an across the board tax-saving. The lowering of tax rate, while ensuring that there is no erosion of existing tax base, is expected to encourage present non-filers to move towards compliance by paying taxes and filing the tax return.
The Budget proposals also focus on inculcating a sense of disciple in the filing and assessment process of tax returns.
Key changes in this regard are highlighted below:
Timely filing of tax return
Unlike many countries which provide for formal extension of tax return-filing timelines, India does not have any provision for availing extensions in the due date. However, the sense of urgency to file tax return within the due date is missing many a time on account of the following:
- No penalty is attracted if the tax return is filed beyond the due date, however within the relevant assessment year (AY)
- A belated tax return may be filed even beyond the relevant AY, but within a further period of one year; this may, however, attract a nominal penalty of Rs 5,000 at the discretion of tax officer
- If there is no tax due to be deposited at the time of filing tax return then delay in filing does not result in additional interest payment
- Rs 5,000 - if the tax return is filed beyond the due date (i.e. after 31 July) but on or before 31 December of the relevant Assessment Year
- Rs 10,000 - if tax return is filed beyond 31 December of the relevant Assessment Year However, where the total income of taxpayer does not exceed Rs 5 lakh, the fee will not exceed Rs 1,000
- FY2017-18: 18 months from end of Assessment Year i.e. by September 2020 (currently 21 months)
- FY2018-19 onwards: 12 months from the end of Assessment Year (e.g. March 2021 for FY 2018-19)
