Is It Important To File Your Income Tax Returns In Time?

By | 31/05/2019

Is It Important To File Your Income Tax Returns In Time?

      Have you realized one important thing that filing of income tax returns (ITR) is around the corner and authorities have already released the necessary utility for such filing? Therefore people consider it as a tedious task, thus starting late which further can lead to delay in filing or in an incorrect filing. July 31st is the due date for filing ITR for individuals. You must know that for the tax year 2018-19, the due date is July 2019. Free Financial Advisory Portal, MoneyMindz.com discusses the significance of filing income tax returns in time.

A provision is also available to file returns after the due date. The returns so filed can be termed as belated. Also, an individual is also given a window to revise the tax return in case any error or omission is noticed after the original return has been filed. One more important thing to remember is that the due date of filing a revised or belated tax return says for the tax year 2018-19, is March 31, 2020.

It is necessary to be aware of the circumstances under which it is mandatory for an individual to file tax returns. In case where income exceeds the maximum exemption limit (for general category Rs 2.50 lakh, for senior citizens 60 years or above Rs 3 lakh and for senior citizens 80 years or above Rs 5 lakh) specified under the Income Tax Act, 1961 (IT Act) for various categories of individuals, it is mandatory to file a tax return.

In situations where an individual incurs a loss from the business/profession or under the head capital gain and wishes to carry forward such loss to subsequent years to take a set-off against future years’ income; it is mandatory to file ITR on or before the due date.

Where the total income of an individual is less than the maximum exemption limit, but tax has been deducted at source (TDS), a return will need to be filed to claim the refund. This situation can be mostly seen in case of senior citizens and non-resident Indians. A timely and comprehensive review of Form 26AS (annual statement of income and tax deducted thereon) will ensure identification of such situations to avoid loss of tax refund.

To avoid interest and late fee implications, timely filing of tax return is necessary. After the due date where an individual files tax return, interest is levied at the rate of 1 percent, per month, for each month of delay following the due date of return filing on any remaining tax payable.

In cases where the return is filed on or before December 31, and Rs 10,000, if the return is filed post-December 31, an individual has to mandatorily pay a late filing fee of Rs 5,000. But the late filing fee cannot exceed Rs 1,000 where the total income of an individual does not exceed Rs 5 lakhs.

It is equally important that the filing is accurate and complete along with filing the tax return on time. The tax department notifies new tax return forms to reflect changes made in tax provisions and disclosure norms each year. New tax return forms notified for the tax year 2018-19 need additional disclosures like specifying the conditions for determination of residential status in India; in case of non-resident individuals, additional reporting of the number of days spent in India, country of residence and the respective taxpayer identification number.

In case where an individual is a director in a company, details such as name and Permanent Account Number (PAN) of the company, whether its shares are listed or not and Director Identification Number (DIN) are required to be reported in the tax return form.

It has become easy for the tax department to track transactions carried out by an individual through various sources with the advancement of technology. Therefore it becomes more important to correctly report the income and make appropriate disclosures to avoid notices or scrutiny at a later date.

Therefore it is prudent that ITR is filed before the due date to ensure that all taxes are paid well in time and to avoid last minute stress and hassles. Moving forward it will help in better planning of taxes and will facilitate informed decisions.

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