Why You Should Fill Income Tax Returns Before Deadline

Filing income tax returns can feel overwhelming, but it's a crucial responsibility for every taxpayer. It ensures compliance with tax laws and contributes to the country's economic growth. In fact, filing the ITR before the deadline offers numerous advantages, from avoiding penalties to facilitating financial planning. And this is what we discuss in this article, along with understanding some regular guidelines in ITR filing and answering the most common questions of ITR.

What are income tax returns?

An income tax return is a document filed with the tax authorities that details your taxable income and calculates the taxes you owe or the refund you're entitled to. It includes information like your salary, investments, deductions, and tax credits.

It is a mandatory process for individuals and entities with income above a certain threshold – which in India as of budget 2024 is 0-3 lakh per annum.

General guidelines to fill income tax returns

• Eligibility: Anyone earning above a certain threshold or having taxable income must file a return.
• Gathering Documents: Collect all relevant documents like Form 16 (salary slip), investment proof, and tax-saving receipts.
• Filing Methods: You can file electronically or submit paper returns (though e-filing is generally faster and more convenient).
• Choose the Correct ITR Form: Select the appropriate ITR form based on your income sources and tax category.
• Pay Any Tax Due: Calculate the tax payable and pay any due amount before filing the return.

Steps to file your ITR:

1. Collect Necessary Documents: Gather all required documents, including Form 16, bank statements, investment proof, and any other income-related documents.
2. Choose the Correct ITR Form: Select the appropriate ITR form based on your income sources and tax category.
3. Verify Form 26AS: Cross-check Form 26AS to ensure all tax credits are reflected accurately.
4. Calculate Your Income: Sum up all income sources, including salary, business income, rental income, and capital gains.
5. Claim Deductions: Avail of deductions under sections like 80C, 80D, and others to reduce your taxable income.
6. Fill in the Details: Carefully enter all details in the chosen ITR form, ensuring accuracy to avoid discrepancies.
7. Pay Any Tax Due: Calculate the tax payable and pay any due amount before filing the return.
8. Verify and Submit: Verify the details and submit the return online. After submission, e-verify the return to complete the process.

10 Benefits of Filing Income Tax Return Before the Deadline

1. Avoid Penalties and Interest: Filing before the deadline helps avoid penalties and interest charges for late submission, which can add up significantly over time.
2. Timely Refunds: Early filing often leads to quicker processing and faster refunds, providing timely access to your money.
3. Easy Loan Approvals: Banks and financial institutions often require ITR receipts for loan approvals. Filing on time facilitates smoother loan applications.
4. Avoid Last-Minute Hassles: Early filing reduces the stress and potential errors associated with last-minute submissions.
5. Carry Forward Losses: Filing ITR on time allows you to carry forward losses to offset future gains, reducing future tax liabilities.
6. Prevent Legal Consequences: Timely filing ensures compliance with tax laws, preventing legal notices and scrutiny from tax authorities.
7. Improve Credit Score: Consistently filing ITRs on time positively impacts your credit score, enhancing your financial credibility.
8. Claim Deductions and Benefits: Filing on time ensures you can claim all eligible deductions and benefits, optimising your tax liability.
9. Facilitate Visa Applications: Many countries require ITR receipts for visa processing. Timely filing supports your visa applications.
10. Contribute to Nation-Building: Paying taxes on time contributes to national development by ensuring the government has the necessary funds for public services and infrastructure projects.

Endnote

Clearly, filing income tax returns before the deadline is not just a legal obligation but also a prudent financial practice. From faster refunds and avoiding penalties to facilitating loan applications and visa processing, timely filing benefits you in various ways.

This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.