Now, shed lethargy in filing tax returns, say experts

Moneycontrol BureauChanges in tax administration brought about in Budget 2017-18 will force taxpayers to be more proactive in filing their tax returns and consequently lead to greater compliance, feel tax experts.The mandatory penalty specified in the Budget for late filing of returns will force taxpayers to pull up their socks. “Till now taxpayers used to consider the due date of filing returns to be quite non-existent, since the penalty for late filing of return was discretionary and practically was never levied. This will change the outlook of taxpayers towards this annual ritual. Late filing of returns is now liable to mandatory fees, which will ensure timely filing of returns. Also, since the time line for filing revised returns has reduced, it is more likely than not that greater compliance will be the new normal,” Neha Malhotra, Executive Director, Nangia & Co told Moneycontrol.Budget 2017 has proposed a penalty of Rs 5,000 if tax return is furnished after the due date but on or before December 31 of the assessment year. For delay beyond that Rs 10,000 will be levied as penalty. The normal deadline for filing tax returns for indiviudal assessees is July 31 of the financial year.Sudhir Kaushik, Co-founder and CFO, Taxspanner.com agrees. He feels taxpayers will have to do away with 'casual approach' toward filing of returns. “The best part of the changes on tax administration is that penalty on late filing of return is now mandatory and not discretionary in the officer's hand like earlier. This will bring about a big change in taxpayers' attitude. The casual attitude toward tax compliance including return filing needed to change,” Kaushik said.He said that reduction of time limit for filing revised returns would lead to lesser manipulation by taxpayers. “The reduction in time limit for filing revised return and belated return would limit the scope of manipulation. There are many with income-above basic exemption who do not file returns even though it is mandatory. Now, a penalty would ensure that they file their returns. It would also force them to declare other incomes i.e. interest, deemed rental, dividend etc. Hence, tax collection as well as tax base i.e. number of e-filing would increase. The Budget proposal of mandatory filing of return and penalty for delay is going to improve tax compliance,” Kaushik said.Untill now, a taxpayer could file revised return in case of omission or errors in original return, at any time within 1 year from end of relevant assessment year. Archit Gupta, Founder & CEO ClearTax.com, also feels Budget 2017 will lead to greater compliance. “With the changes announced in the Budget, the government has taken a firm stance towards wider compliance. We may see a rush of filers close to the e-filing due date,” Gupta said.