Filing Income Tax Returns (ITR) on time has many benefits as you can then carry forward losses of a particular year to the subsequent year and claims can be processed fast. Avoiding penalties and interest is one of the main justifications for timely filing of ITR. A penalty of Rs 5,000 has to be paid if an assessee does not file ITR by the deadline set by the income tax department, which is usually July 31.
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If you keep putting off filing, the fine could reach Rs 10,000. In addition, if you owe any taxes and do not pay them by the deadline, you will have to pay interest on the amount still owed. These fines and interest fees can be avoided by timely filing your income tax returns.
Claim refunds
Another important benefit of filing ITR on time is that an assessee can claim a refund for the excess taxes paid if he is eligible.
Build your financial history
Filing ITR on time helps to boost the assessee’s financial history and credit scores. As Cibil scores are essential for banks when they approve loan applications, the lender will ask for ITRs for three years. Income tax return filed on time helps the bank to access borrower’s income and repaying capacity. Also, filing ITR on time helps to get a credit card. By filing income tax, the assessee demonstrates to the banks and non-banking financial companies that he is a responsible borrower and pays his income tax on time.
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Avoid scrutiny
An assessee can also avoid income tax department audits by submitting ITR on time. In fact, ITRs filed after the due date have more chances for scrutiny; thus an assessee must file the ITR on time to avoid the time-consuming and stressful process of scrutiny.
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Revising returns
If an assessee makes a mistake in filing a return, he has time till the end of the relevant assessment year to make the changes, provided the return was filed on time. So, the earlier an assessee files the return, he will have more time to revise the return to rectify errors, if any. If the assessee has incurred any losses during the assessment period under the head “capital gains” or suffered any loss in business, he must file the return before the due date. If the return is not filed before the due date, then the assessee will never be able to carry forward losses to subsequent years for set-off against income in future years.
Filing income tax returns on time is not just an assessee’s legal responsibility, but comes with more benefits than you may know. Therefore, it is important to make sure that an assessee files his income tax returns on time every year.
BIG BENEFITS
- Assessee can carry forward losses to subsequent years only if he files ITR by due date
- If filed on time, one gets more time to revise the return if needed
- Filing ITR on time helps to boost the assessee’s credit scores
