August 31, the due date for filing your tax return for 2014-15, is just a week away. If you haven’t filed your return yet, it’s time to get cracking. .

Here are five reasons why you should file your returns by the due date.

Save on cost
Filing tax returns on time can save you interest cost. If you owe money to the taxman, a late return will mean an interest payment of 1 per cent for each month of delay (part of a month is considered a full month for the calculation).

Say, you owe the taxman ₹25,000 for the year ended March 2015, and you file your tax return in November 2015 instead of by August 31.

While filing the return, along with the ₹25,000, you will have to pay ₹750 as interest — at 1 per cent for three months (September to November). This interest on delayed tax filing is in addition to the interest on delayed tax payment for not settling the dues (through advance tax instalments) by March 2015.

If you file your tax return by the due date, you escape the extra 1 per cent a month interest on delayed return filing.

Also, if you delay filing the tax return beyond the assessment year (March 2016 is the close of the assessment year for the year ended March 2015), the taxman has the power to levy a penalty of ₹5,000. This is a discretionary penalty — the assessing officer may choose to levy it or not.

Quicker Refund
Filing returns on time also means faster processing of refunds, in case you have paid excess tax during the year and claim a refund in the return.

Says Neha Malhotra, Manager, Nangia & Co, Chartered Accountants, “If the return is delayed beyond the due date, the refund may come but it will take time.” Not just that, a delayed return also means that the interest you get along with your refund will be for a lesser period.

If you file the return by the due date, interest at 0.5 per cent each month is payable from the start of the assessment year, that is from April, till the month when the refund is paid to you.

But if you file the tax return late, interest calculation on the refund begins only from the month in which you file the return.

Possible to revise
You have the option to file revised returns if you have made a mistake in the original tax return. But this benefit is available only if you have filed the original return by the due date.

So, if you find that you have, by mistake, declared excess income or not claimed a deduction in your delayed return, you will have no recourse to correct the error. Ergo: Your tax payment will be higher than what you otherwise would have paid, if you go wrong in your delayed return.

Carry Forward And Set Off Losses

Being punctual with your tax return also gives you the significant benefit of being able to carry forward and set off your losses for eight years in the future. So, if you have incurred a loss from the sale of shares, it can be carried forward — but only if you have filed the tax return by the due date.

The benefit is lost if you miss the return filing deadline. The saving grace is that the carry forward and set off is available on loss from house property, even if the return is delayed.

Handy Ddocument

Your tax return can open many doors for you. For instance, it may be a must-have document when you apply for a loan or a visa to a foreign nation. So, file it before the due date even though the taxman gives us time of two years from the end of the financial year.

Anand Kalyanraman
This article was published on August 23, 2015, in BusinessLine (The Hindu)