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You May Lose These Tax Benefits u/s 80C and 10(10D) of Income Tax Act, 1961

  2/8/18 4:22 AM

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Every person whose taxable income is more than the basic exemption limit is required to file an income tax return every year. The due date for filing income tax return depends upon the legal status of the assessee. The Due date for companies and assessees liable for a tax audit is 30th September. For the others, the due date of filing a tax return is 31st July. Not filing an income tax return may not allow you to avail tax benefits u/s 80C and 10(10D), and can have severe repercussions for a taxpayer. Some of these include:

Carry forward of losses

Every assessee is entitled to claim set off for any losses incurred against income earned during the relevant financial year (subject to income tax provisions and rules). Further, an assessee is also entitled to carry forward such losses that could not be set off in a particular financial year.

However, if an assessee does not file his return of income before the due date, then such losses cannot be carried forward.

Deductions under Chapter VI A

An assessee is entitled to claim deductions under Chapter VI A for investments in Provident fund, NSC, life insurance premium paid, the medical premium paid, etc. However, the same cannot be claimed if the assessee does not file his return of income within the specified due date.

Interest under Section 234

ITR includes the sources of taxable income earned during the previous year and the tax liability arising from the same. Income tax liability is required to be paid as per income tax provisions. In case of delay in payment of tax liability, interest is levied at 1% per month or part of the month.


In case of delay in filing income tax return without any reasonable cause, the penalty for Rs. 5,000 may be levied. The Assessing Officer does have the power to waive such penalty. Also, a reasonable opportunity of being heard is given to the taxpayer before the imposition of the penalty. But, it is always better to adhere to the rules instead of getting into the hassles of hearings.

Loss in interest on refund

Assessees are eligible to claim a refund in case the tax paid is higher than the amount of tax liability. A refund is required to be processed and paid within the time limits specified in the income tax act. In case of delay in payment of refund, the department is liable to pay interest on the same.

If a return is filed after the due date, then interest on refund is reduced for each day of delay.

Other implications

Tax returns prove to be of prime importance while considering tax payer’s creditworthiness. Tax returns are mandatory requirements for any loan application, visa application, etc. Hence, non-filing or delayed filing of income tax return proves to a hindrance for the assessee in more ways than one.

Also, it is important to note that delay in filing of income tax returns can be condoned by the assessing officer provided there is reasonable cause for delay.

To conclude, availing tax benefits u/s 80C and 10(10D) of the Income Tax Act, 1961 is beneficial; however, you need to have a proper tax planning along with filing tax returns within the given timelines. Else you will have to face the above-mentioned consequences. Be it anything, life insurance, or mutual fund taxation or any other tax advantage funds; you need to understand the tax structure in India first. Sometimes, the maturity benefits may not be eligible, but tax deduction u/s 80C is always there for premiums paid towards the policy.

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