Anyone who earns a taxable income in India must pay their dues and file their income tax returns (ITR) on time. Tax returns assist the government in keeping track of taxpayers and preventing tax evasion and fraud. If you are an eligible taxpayer and do not pay your taxes on time, you may face penalties or jail. In this blog, we explain why you should file your Income Tax Return on time and their benefits.
Here’s a summary of everything you need to know.
What Is an Income Tax Return?
An income tax return is a document that helps the government keep track of your earnings. If you fail to notify the government, you may face penalties and troubles in the future due to tax evasion. As a result, all taxable persons are required to file income tax forms regularly.
The Income Tax Department has reminded taxpayers of the need to file their ITRs on time on multiple occasions. A penalty of up to Rs. 10,000 might be imposed if an individual forgets to file their ITRs. Aside from that, a delay or pause in filing income tax returns makes you accountable for interest on the taxable amount owed to the government.
Related read: Income Tax Returns (ITR) AY 2021-22
Which ITR Form Should You File?
What Are The Benefits Of Filing Tax Returns?
You can benefit from filing your ITR on time in various ways:
- Loan Approval Is Simple
When applying for a vehicle loan (2-wheeler or 4-wheeler), a home loan, and other loans, you will benefit from filing the ITR.
- Obtain a Tax Refund
If you are due a refund from the IRS, you should file your tax return as soon as possible to ensure that you receive your refund.
- Proof of income and residency
The income tax return can be used to prove your income and address, which is required when applying for a loan or visa.
- Visas are processed quickly
Most embassies and consulates request copies of your tax returns from the previous two years when applying for a visa.
- Carry Your Losses Forward
You can carry forward losses to the following years if you file your income tax return before the deadline. This can be utilised as depreciation against future earnings.
- Preventing Penalties and Prosecution
If you don’t file your ITR, an income tax officer can start criminal proceedings against you for a period of 3 months to 2 years, as well as a fine.
The period may be extended to ten years if the amount of tax you owe is higher.
In the case of under-reporting of income, the income tax officer may apply a penalty of up to 50% of the tax payable.
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What Is The Deadline For Filing An ITR For The Assessment Year (AY) 2021-22?
The deadline for filing returns for the Assessment Year 2021-22 was July 31, 2021. However, the Income Tax Department has extended the deadline for all taxpayers (below mentioned in the table).
Many taxpayers feel that once their taxes are paid, they are free of additional obligations. Missing the ITR filing deadline, on the other hand, has legal consequences. For filing returns after the due date, you will be charged a late filing fee.
|Particulars||Earlier due dates||New due dates|
|1||ITR filing for individuals and entities not liable for tax audit||31st Jul 2021||31st Dec 2021|
|2||ITR filing for taxpayers covered under the tax audit (other than transfer pricing cases)||31st Oct 2021||15th Feb 2021|
|3||ITR filing for taxpayers covered under transfer pricing||30th Nov 2021||28th Feb 2021|
|4||Due date for Revised return / belated return of income for FY 2020-21||31st Dec 2021||31st Jan 2022|
|5||Filing of Revised return / belated return for FY 2019-20||31st Mar 2021||31st May 2021|
Related read: How To Save More Taxes Using
An Income Tax Calculator?
What Happens If People Don’t File Their Income Tax Return On Time?
If you don’t file your income tax returns on time, the following problems will occur:
- The income tax officer has the authority to impose a fine and prosecute taxpayers for a period of 3 months to 2 years if they do not file the ITR within the extended deadline. Furthermore, if you owe more than Rs. 25 lakh in taxes, the prosecution time might be extended to 7 years.
- Unless the net payable tax amount exceeds Rs. 3000, however, the proceedings would be put on hold. The income tax officer can apply a penalty of up to 50% of the unpaid tax if you under-report your income.
- Apart from the penalty for late filing, interest at 1% per month or part thereof shall be imposed until the taxes are paid.
- It’s vital to remember that you can’t submit an ITR unless you’ve paid your taxes. Interest will be calculated from the date that falls immediately after the due date. As a result, the longer you wait, the more you will have to pay (tax plus interest).
- Suppose an ITR isn’t submitted by the deadline. In that case, you won’t be able to carry any losses forward under the categories of “earnings and gains of business or profession” or “capital gains.”
- Note: Unabsorbed losses and reductions under the heading “revenue from residential property” may, however, be carried forward.
- The Income Tax Department’s central processing centre in Bengaluru processes and double-checks the return after signing and filing.
- Only once this verification is completed can your tax liability or refund be determined. As a result, if the taxpayer is seeking a refund, late submission of the income tax return will delay receiving the refund.
- If you make a mistake when filing an ITR, you must follow certain regulations in order to make the necessary corrections. Taxpayers previously had a two-year window to examine and resubmit incorrect ITRs.
- However, as of the end of the fiscal year, the government has restricted this window to one year. As a result, the sooner you file your returns, the longer you have to revise them and correct any problems.
Related read: How To Reduce Your Taxes In India?
To avoid such inconveniences, you must ensure that your income tax forms are filed on time. As a result, as the ITR filing deadlines approach, it is critical that you should obey and comply with the legislation enacted by the government. If you wait too long to file your ITR, you risk receiving a hefty penalty.
How Can We Help You?
At ICI, we have professionals with significant expertise and experience that can assist you with meeting all of your Income Tax obligations, including timely compliance, so that you don’t fall under the wrong side of the law.
Our service scope includes: