Benefits of filing ITR on time
Taxpayers are required to file their income tax return (ITR) before the set due date of the assessment year (AY). The government normally gives a 4-month window for taxpayers to consolidate their income details and file their ITR every AY. If the returns are not filed by the given due date, you may face penalties or other consequences.
Benefits of filing ITR
Filing ITR is an annual activity that is considered to be both social and moral responsibility of every citizen of the country. Apart from that, there are many other benefits which are mentioned below:
1. Loan or Card Company may seek your Return
If you are planning to apply for a vehicle loan (2-wheeler or 4-wheeler), house loan, etc., then it is recommended to file your returns as the loan company may request it. Consider filing your spouse’s returns too, if you want to apply for a loan as a co-borrower. In some cases, even credit card companies seek proof of return before issuing a card.
2. Claim Tax Refund
If you are to receive a due refund from the Income Tax department, you must file your ITR on time and get it as early as possible.
3. Claim adjustment against past losses
To claim an adjustment against various past losses incurred by an individual or a business, it needs to be recorded in the tax return in a financial year.
4. To avoid Penalty and Prosecution
Not filing your ITR on time can lead to a penalty and other inconveniences. You can avoid this by proactively filing your ITR.
5. Consequences of late filing ITR
Apart from a penalty, there are many other consequences that you may have to face due to the delayed filing of your ITR. In the Union Budget 2017, a new Section 234F was announced by the government which is applicable for returns filed from FY 2017-18 onwards. The maximum penalty is Rs 10,000.
6. Compensate losses in the next Financial Year
Individuals cannot carry forward losses of the current financial year to the next financial year until an ITR is filed. As per the income tax law, individuals are not allowed to carry forward losses and set them off against future years’ income if the ITR is not filed within the due date. Hence, it is important to file your income tax return on time in order to claim the losses in future years.
Filing ITR on time is beneficial in many ways while keeping you tax-compliant. The e-filing season has begun for the Financial Year 2018-19 and the due date is 31 July, 2019. Be a responsible citizen and file your taxes early to avoid the last-minute issues.
7. Less time to revise your Return
If you make a mistake while filing your ITR, under the changed rules, you can make the necessary changes before the end of the relevant assessment year. Earlier, taxpayers had two years to revise and resubmit their inaccurate ITR.
8. Interest on delay of filing ITR
Under Section 234A, if a taxpayer does not file ITR before the deadline, interest will be levied at 1% every month on the unpaid tax amount. Further, it must be noted that one cannot file ITR unless the taxes are paid.
9. Delayed Refunds
If you are entitled to receive refunds from the I-T department, you should file ITR before the due date. You can file your ITR on time from the government portal and stay away from tax notices and other dire consequences.
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