Income Tax : Why you must file your ITR now and not wait till deadline
Income Tax Return: Last week, when many taxpayers tried to file their ITR after July 31, 2021 (the original due date), they were asked to pay a late fee. However, the new Income Tax portal had been fixed now, and that taxpayers will not be charged a late fee for filing forms until September 30, 2021.
The Central Board of Direct Taxes (CBDT) has extended the deadline for filing income-tax returns for the financial year 2020-21 (Assessment Year 2021-22) to September 30, 2021, thus this should not have been the case. We should learn from this income tax glitch. Infosys developed, Income Tax portal, is not error free & new issues will definitely arise in coming days. That is why it will be better to submit the return immediately rather than waiting until the end of the extended period. There are other reason as well.
1. Avoid interest on income tax
You must pay up your tax liability by the end of the financial year, or you may be charged for interest. Although the CBDT has extended the deadline for submitting ITRs, but no relief from interest under Section 234A has been given if the tax liability exceeds Rs 1 lakh. Section 234A deals with the penalty for delay in filing the ITR.
Interest under section 234A is calculated at a rate of 1% per month or part thereof, beginning on the day immediately following the original due date of filing of return of income and ending with the date on which return of income is furnished. Therefore, if the self-assessment tax liability of a taxpayer exceeds Rs 1 lakh, he would be liable to pay interest from the expiry of original due date, i.e., July 31, till the date of filing of return of Income.
For instance, if you haven’t filed your income tax return yet and there is a pending tax liability of say Rs 1.2 lakh, you will have to pay Rs 1,200 as interest every month till you file the return.
2. Faster processing of ITR and refunds
Once you file your income tax return, the Income Tax department processes your return by cross verifying with the available information. Once the return is processed, an intimation cum notice is issued to the taxpayer stating that the return has been processed.
If there is a mismatch between the taxpayer’s return and the information available by the department, the notice will be sent for the discrepancies and seeks rectification or explanation. Refunds are processed if there are no discrepancies. This procedure might take weeks or even months to complete. “Filing returns on time ensures that they would be processed quickly and that refunds are received fast. Individuals who submitted their forms early and had their bank accounts pre-validated on the income tax site received remarkably prompt refunds even last year.
3. Avoid last-minute issues or glitches
No doubt technical glitches affect the functioning of the income tax portal, restricting taxpayers and practitioners from carrying out tax-related works whether it is filing ITR or audit related activities. Before the last few days of the return filing deadline, people face more problems. This is why it is advisable to file the ITR in advance.
It is always advisable for everyone to avoid last minute rushes for their tax filings. So, collect all your tax filing related documents and file your return.
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