31st July 2017, is indeed an important day – After all, it is the last day to file Income Tax Returns (ITR). These days, ITR filing has been made easy by Sahej (ITR-1) form. Most of us wait for the last moment before e-filing Income Tax Returns on the website incometaxindiaefiling.gov.in but it is best to file ITR well in advance before the due date.
Here are some of the reasons that tell you why filing income tax return online well in advance before the due date is important:
- Avoiding Penalties and Fines
Paying after the due date attracts an extra charge as penalties, whether it is a phone bill, electricity bill or school/college fees. The penalty holds true even when you file your taxes after the due date. When you are liable to pay additional taxes, the interest rate is 1% from the start date to the last date of filing of returns.
If your unpaid amount exceeds Rs.3000, the Income-tax department can initiate criminal prosecution against you. Thus, to avoid additional payout on taxes, it is better to file your ITR in time.
- Getting a Chance to Revise Your Returns
In this digitized era, ITR filing is easy. However, there could be mistakes caused by misprint or overlooked details, such as missed tax benefits, income, etc. Even when you file the income tax in time, you get the opportunity to revise your IT return even after the due date. The common mistakes done are missed income; extra tax paid etc. which can cost you in long term either by fines imposed or loss of tax refunds.
So, if you have filed an initial income tax return before the due date, revised returns can be filed again before the end of the current financial year. Thus, as long as the Income-tax return is filed by 31st July 2017, revised returns can be filed any time before 31st March 2018.
- Preventing Interest Loss on Refunds
Taxpayers are liable to pay 6% of annual ROI on the extra tax paid if the amount exceeds 10% of the total tax paid. These refunds are commonly available for the ones who have paid extra tax/advance tax/TDS. In case, the Income-tax return filed was within the due date, interest will be calculated from 1 April of the assessment to the date on which the refund amount is actually processed.
Moreover, if someone filed an Income tax return after the due date, interest is calculated from the filed date until the date on which the refund was processed, in which at least 4 months’ interest from April to July will be excluded. This loss of interest affects you when you have a huge refund due.
- Carrying Forward Losses and Gains
If you face loss in your business, capital gains, or any other source of income etc. these can be carried forward to the next financial year, which relieves you from tax, provided that the Income-tax return is filed before the due date. Moreover, the tax is relaxed only if the loss is through the property.
- Eliminating the Last Moment Stress
Delaying filing for ITR brings an undue financial burden. If you wait until the due date to file ITR, there is a chance that you forget to include one or more tax savings. This normally happens when you don’t have enough time to collect all the relevant documents such as the TDS certificate, Loan payment Statements, Form 26AS etc., which are required to complete the Income-tax return process.
Also, read more about different types of taxes in India and income tax slabs.
Moreover, the filing of ITR on the last day results in an overload of requests on a website, which in turn leads to technical failures and site maintenance issues, which can further delay the ITR Filing process. Filing of ITR has become essential because the documentation of the same is always referred to when you apply for a loan, credit card or any type of credit.
In case your Income-tax return reflects that it was filed after the due date, it may affect your chances of getting a loan application approved. So, to avoid any repercussions, file your tax returns in a timely manner.