July 31 is here. And you have been lazy till now, not bothering to file your income tax return. So today you are an extremely worried man. What happens now?

Actually there is no major reason for you to worry.

The return can still be filed. As the Web site of the Income Tax Department clearly points out: "It may be furnished at any time before the expiry of two years from the end of the financial year in which the income was earned. For example, in case of income earned during financial year 2006-07, the belated return can be filed before 31st March 2009."

The returns that need to be filed by today, are essentially returns for the income earned during the financial year 2006-2007 (i.e. from April 1, 2006 to March 31, 2007). So if you still haven't filed your return you have time till March 31, 2009, to file your returns.

But this obviously comes with some costs attached to it. If there was no cost, then there is no point in having a last date to file the income tax return.

For those individuals who have a tax amount outstanding, if they file their returns after July 31, 2007, then a simple interest of 1% per month will be charged on the tax amount that is outstanding.

Hence, if you do not want to pay any interest it makes sense to pay up the income tax outstanding by today or as soon as possible, so that the interest amount to be paid is low.

What this also means is that those individuals whose tax has already been deducted at source need not worry at all. The company's salaried employees work for, usually deduct income tax and pass it onto the government on their behalf. In most cases salaried employees, if they do not have any income other than salary, have usually paid the income tax that is due.

Such individuals, who still haven't filed their taxes, need not worry. They have time to file their taxes till March 31, 2009.

But there is a slight catch here. If taxes are filed after March 31, 2008, then the income tax department can levy a fine of Rs 5,000. Having said that, there is enough time till March 31, 2008, to file the income tax return. This fine may also be levied on those who have an income tax outstanding and they may have to pay this amount along with the interest due on the tax outstanding.

I use the word may primarily because of the lack of clarity on this front. As the Web site of the income tax department points out: "If the return is not filed even after the end of the assessment year, penalty may also be levied." The last date of the assessment year in this case being March 31, 2008.

Hence if you are dreading visiting the income tax office today, you can still wait.