22 Oct

Why should you file your return now and not wait until December 31st

Why should you file your return now and not wait until December 31st 

You want to clear your tax liability by the end of the financial year; otherwise, the arrears attract punitive interest.

Last week, we were informed that the Income Tax Return (ITR) software has been repaired and the taxpayer does not have to pay a late fee to file a return until September 30, 2021. The issue came up when several taxpayers tried to file. They posted their ITR (original due date) on July 31 and were asked to pay the late fee.

This should not happen, as the last date for filing income tax returns for the financial year 2020-21 (the assessment year 2021-22) was extended by the Central Board of Direct Taxes (CBDT) to September 30, 2021.

But instead of waiting until the last day of the extended period, it would be beneficial to file a return now. This is why.

Avoid punitive interest

You want to clear your tax liability by the end of the financial year; otherwise, the arrears attract punitive interest. “Although the CBDT has extended the deadline for filing ITRs, no relief has been given from the interest leviable under Section 234A if the tax liability exceeds Rs 1 lakh. Interest under section 234A is calculated at the rate of 1 per cent or part thereof per month after the date of filing of return of income and from the date of expiry of return of income.

Section 234A deals with penalties for delays in filing returns of income. “Therefore, if the self-assessment tax liability of a taxpayer exceeds Rs.1 lacs. Thus, taxpayers should pay their taxes and file their income tax returns on time.

So, if you have not yet filed your return and Rs 1.5 lakh tax is pending, you will have to pay Rs 1,500 interest per month till you file the return.

However, some experts are of the opinion that the government should also waive interest on overdue taxes. “Given that many taxpayers are unable to file ITRs this year due to technical difficulties in the new IT portal, the government should waive interest payments under 234A this year, even if the ITR is filed after July 31. 2021 and self-assessment tax is more than Rs 1 lakh.

Quick processing of returns and refunds

Once you file your return, the IT department processes your return by cross-verifying the available information. Once the return has been processed, the taxpayer is given a notice that the refund has been processed.

If there is a discrepancy between the return filed by the taxpayer and the information available to the account, the discrepancy is noted in the notice and an amendment or clarification is sought. If there is no disagreement, the refund is processed. This process can take weeks or months. “Timely filing of returns means early processing and early return. Even last year, it appeared that individuals who filed early returns and whose bank accounts were pre-verified on the income tax portal received surprisingly timely returns.

Avoid last-minute mistakes

Often technical difficulties affect the functioning of the income tax portal, preventing taxpayers and businesses from performing tax-related tasks. People face more problems in the last few days of the return filing deadline. It is therefore advisable to file ITR in advance.

In particular, now that all TDS payments have been completed and TDS certificates have been issued by employers and other deductors, everyone can avoid the last-minute rush to pay their taxes.

So, collect all the documents related to your tax payment and file your return. If you are a salaried person and you do not have income from other sources, you can easily file it.

Introduction of Alliance Tax Experts

Alliance Tax Experts is a one-stop solution for all your Financial Needs. We are the leading Income Tax consultant, GST consultant & Company registration services provider in Mumbai, Navi Mumbai & all over Maharashtra, India.

We provide consultancy starting from Company Registrations, Income Tax Filing, Accounting, GST Filing, Income Tax Audit, GST Audit services. We offer comprehensive compliances services for Proprietors, Partnerships, Private limited companies, limited liability partnerships, OPC private limited Companies, Trust and Individuals.

For any query, you may reach us on santoshpatil@alltaxfin.com or call on 9769201316


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