Hence it is important to file Income Tax Return on an annual basis, well before the timeline without procrastination.
There is a popular misconception that Income Tax Filing is purely voluntary. This ignorant misconception can land people in trouble as filing Income Tax is not just a moral and social responsibility, but a legal mandate for every citizen who earns above a certain limit. Failing to file Income Tax Return is liable to a penalty for concealment of Income, ranging from 100 % to even 300 % under section 234A of the Income Tax Act. If proved, Evasion of Tax is also a criminal offence that is punishable under Chapter XXII of the Income-tax Act, 1961.
Hence it is important to file Income Tax Return on an annual basis, well before the timeline without procrastination here's all you need to know from the expert Daphne Anand, Chief Technology Officer, IndiaFilings
Lower chances of erroneous filing
Income Tax Return Filing requires meticulous care, as Tax payers need to carefully assess their Tax Statements, Interest Income certificates, documents etc., declare income from all sources and ensure that every Tax Saving investments is declared in the year. Spending enough time with required attention lowers the chances of erroneous filing significantly, thus avoiding the need to address Defective Return notices from IT Department later.
Time for revision
Even if the Tax Payer files the Income Tax Return with diligent care, many a times, there is a revision that may be required in order to include a missed Tax Saving exemption or to include a forgotten income from a particular source. Filing Income Tax Return early, provides an opportunity to re-review and make any revisions in the submitted ITR Form.
Income Tax Department does an e-verification of key input data, as a step before the ITR form is completely processed. Income Tax Returns that are filed earlier have a good chance of getting e-verified earlier, thus giving a peace of mind to the Tax Payer.
Faster tax refunds
Tax Refunds are disbursed on a ‘First-Come First-Served Basis’. Filing Income Tax Return early would result in a faster Tax Refund.
Avoid late filing fee
Tax Payers who do not file their Income Tax Return on time are charged with a late filing fee under Section 234F. If the Tax payer files the return after the due date but before December 31st, the late filing fee is Rs. 5,000. If the taxpayer files the return after December 31st, then the late filing fee is Rs. 10,000. However late filing fee is limited to Rs. 1000 if the total income does not exceed Rs. 5 Lakhs. Tax Payers can easily avoid this fee by filing their Income Tax well before the due date.
Tax Payers with Tax Liability of over Rs. 1 Lakh should get their Income Tax Return Filed earlier, as they would otherwise be subject to an increased interest payment of 1% on a month on month basis or part thereof.
Avail carry forward losses
IT Department gives a provision to carry forward losses from one Financial Year to another. However, only the Tax Payers who file their Income Tax Returns before the due date, are eligible to avail it.
Avoid last minute surge
Every year, there is a huge surge in traffic in Income Tax Portal towards the end of the Income Tax Filing deadline, as a vast number of people attempt to file their Income Tax Returns simultaneously. This causes the portal to be extremely slow resulting in too much time for getting the Tax Return to be filed or in some cases even impossible for filing to happen. This unnecessary hassle and chaos can be easily avoided by filing the Income Tax Returns well in advance.