Income Tax Refund: Finance Minister Nirmala Sitharaman said that tax-filing reforms have resulted in the speedy filing and processing of income tax returns. She said there has been a 100% increase in the total percentage of ITRs processed within one day of their filing compared to the previous year.
Processing time for income tax refunds has decreased. While taxpayers who filed returns for AY 2023–24 had to wait a few weeks for refund processing, however, many taxpayers who filed returns in July got their refunds quickly.
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A taxpayer on social media reported that his tax refund received within 12 hours. Nirnay Kapoor, a journalist by trade, shared screenshots of his ITR filing and refund deposit messages on Twitter, saying he had never experienced such quick processing of the return. He had submitted his return in the morning on July 27 and received notification by evening of the refund deposit.
Refund processing shouldn’t ever be a concern for return filers because the system has improved greatly in recent years. Instead, in order be eligible for early refunds and avoid last-minute filing headaches, taxpayers should aim to file their forms as early as possible.
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Advantage of filing ITR before due date
Additionally, early ITR filing has a little-known advantage. If a taxpayer files an ITR before the deadline and receives a refund, the Income Tax Department will pay interest at a rate of 0.5% per month on the amount of the refund. This interest is calculated from April 1 to the date of the refund. The last day to file ITR is 31st July 2023, so file ITR as soon as possible and get o.5% of interest on your refund amount.
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What happens when you are not filing income tax returns?
You must timely file your income tax returns in accordance with the Income Tax Act. If you are not filing income tax returns, you could be subject to severe fines and have trouble acquiring a job, a visa, etc. On the other side, filing your Income Tax Return (ITR) on time gives you access to a number of benefits.
But when you don’t file your ITR on time then you may face the issues like:
1. Interest on the tax amount:
In accordance with Section 234A, if you don’t make your tax payments on time, you will be required to pay interest at the rate of 1% per month on the unpaid tax balance. From the time your tax return for the relevant financial year is filed until the payment deadline, interest is calculated. Here is an illustration to help you comprehend.
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2. No carry forward of losses:
If your investment has suffered a loss, you can use it to reduce your income for the next year. As a result, it will lower your tax obligation for the upcoming fiscal year. Losses must be declared in your ITR by the due date in order to carry them over and offset them. You won’t be able to carry these losses forward and offset them against future gains if your tax return is filed after the deadline. You can, however, carry on the losses incurred in relation to real estate.
3. Penalty charges:
You will have to pay a penalty as one of the main effects of filing your ITR late. If you don’t submit your ITR by the deadline, Section 234F mandates that you pay upto Rs 5,000 late fee. If your yearly income is under 5 lakh, the late fees are only up to Rs 1,000.
Till July 27, more than 5 crore returns have already been filed by taxpayers. Also, the Income Tax Department has already processed over 2.69 crore verified ITRs. So if you haven’t filed your ITR yet, you should try to file it as soon as possible to avoid all the above consequences of late ITR filing.
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