As a small business owner, here are three steps you can take if you missed your tax filing deadline. Running your business and planning for its future can eat up a bulk of your time daily. It is possible that you may have missed certain important deadlines such as tax deadline or the date for filing your tax or advance tax.
The time to pay your taxes has come and gone but that should not stop you from filing it. It is important to file your taxes as it will help you assess your incomes and help you pay your taxes accordingly. Hiding your proceeds from tax authorities can lead to tax evasion and several penalties. In case you missed the tax deadline, you can follow these three steps:
1. File your returns immediately:
To avoid penalties on the failure-to-file and the failure-to-pay, you should file your taxes immediately. It is better to file your taxes with immediate effect as you will have a larger penalty based on the delay in filing it.
By filing your taxes, the penalty that you will have to pay is much smaller and will reduce the amount of interest that will be charged and payable by you. Longer you wait, harsher is the penalty that you have to pay. The tax evasion waiver for the failure-to-file is only for a period of six months.
2. Put together payment arrangements:
Make an arrangement to pay and clear as much as you can. This will help reduce the portion of the non-payment penalties and interest payable. Ensure that you file your taxes with the help of a Chartered Accountant or seek the help of someone to allow you to make the payment online and speed up the payment process.
Make sure you have all the documents required and have allotted the right amounts for expenditure to set off the amount. This will allow you to have a few more benefits if your incomes have been used to pay off items like house rent allowances, conveyance, and gratuity.
3. Set up a payment plan:
In order to cover your tracks and to pay back the tax amount due in full then you need to create a payment plan. Ensure that you know how to set off your income and set aside the appropriate funds to pay the taxes, interests, and penalties. Gauge the duration that will be needed to offset the tax or pay it in full.
Failing to file your income tax returns within the tax deadlines, can result in prosecution. Section 276CC of the Income Tax Act enables the Income Tax department to conduct prosecution into these matters. Taxpayers are required to pay 1% for the late deposit of advance income tax. The penalty of tax evasion can be up to three times the tax evasion amount.
Interest will have to be paid based on the Default in filing of Tax Returns (Section 234A), Default in Payment of Advance Tax (Section 234B) and Deferment of Advance Tax (Section 234C) As a small businessman, it is advisable that you pay your taxes on the prescribed date and that will enable you to learn and assess your income and plan your expenses accordingly. This will help you create a favorable image in society and allow your business to function systematically.