Why is it Important to File an Income Tax Return on 31st July 2022
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The Due date for ITR Filing is just around the corner. It is as near as 31st July. If the individuals fail to file the Income Tax Return by 31st July shall have to bear the consequences by paying late fees from the 1st of August for late filing of their Income Tax Return. In this article let us discuss “Why is it important to file your Income Tax Return before 31st July?” What shall be the consequences of late filing of an ITR?”
Why is it Important to file the Income Tax Return on time?
Well, why shouldn’t be one on time for filing their ITR on time?- that should be the correct question to answer. First, it is the duty of every law-abiding citizen of India to pay their Income tax Return and file their ITR on time. Secondly, filing ITR on or before the due date shall give you the interest on the refund that you deserve. Thirdly, timely filing of an Income Tax Return will save you from unnecessary late fees and other consequences.
Consequences of not filing Income Tax Return on or before 31st July
- If a taxpayer misses to file ITR before 31st July, then it would be his/her responsibility to pay late fee of INR 1000 that may go up to INR 5000.
- The taxpayer shall have to pay monthly interest at the rate of 1% on the delayed payment of the tax so payable.
- If the taxpayer misses the deadline for filing ITR i.e. 31st July, He/she will not be able to carry forward the business or capital loss.
- Such taxpayer shall not be able to take advantage of certain fixed deductions.
- An Individual or HUF (Hindu Undivided Family) shall not be able to take the benefit of new concessional tax rates under the new tax regime.
- The taxpayer shall not be able to receive the amount of interest receivable on the Income Tax Refund from the 1st of April till the date of filing the Income Tax.
Effects on the Interest on the late Income Tax Refund
- In normal case, if the tax payer is entitled to a refund for his income tax return, the Computation of interest payable to him by the Income Tax Department is done at the rate of Monthly 0.50% (6% per annum) from 1st April to the date on which the refund is paid to him.
- Now, as per the amendment made in 2016, in respect of the refund due to the assessee under the income tax return under section 244A, The interest payable to him by the Income Tax Department shall be calculated as per below:
- If the assessee has filed his income tax return within the time-limit prescribed in this case 31st July, in such case he/she shall be liable for the Payment of interest for the period starting from 1st April to the date on which the refund is paid to him/her.
- However, In case of delayed income tax return, interest shall be paid to the taxpayer for the period from the date of filing of his income tax return till the date of payment of the return.
- In other words, If the taxpayer fails to file their Income Tax Return before 31st July, in such a case the taxpayer will not get any interest for the period from 1st April till the date of filing of ITR by him.
- The above amendment was intended to encourage taxpayers to file their income tax returns on time.
What if return of income is defective?
- If the Income Tax Officer feels that the return of income furnished by the assessee is defective, he may give an opportunity to rectify the same within fifteen days after informing him of such defect.
- If the taxpayer seeks additional time to correct the defect or error in the return, then the Income Tax Officer may grant a grace period for the same.
- If the defect in the return is not rectified by the assessee within the aforesaid time, the return shall be treated as void and the relevant provisions under the Income Tax Act shall be applicable in his case, assuming that he has not filed the return.
- If the defect in the return is rectified by the assessee after the time given but before the completion of assessment in his case, the Income Tax Officer is empowered to condone the delay by the assessee and accept his return as valid.
Income Tax Return Filing is very crucial and important to avoid penalties and claiming certain benefits. It is of utmost important to file the ITR before the due date i.e. 31st July. Even if you are not ready with your accounts, it is advisable that you file your ITR by 31st July and revise it later.
Know More: ITR Filing and Process to file ITR
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