Do not miss out on filing your taxes if you want to avoid these consequences!
Do not miss out on filing your taxes if you want to avoid these consequences!
Are you wondering whether you should file your tax return or not? Or are you a procrastinator too?
If you are someone who is wondering why you should file your Income tax return on or before the due date, this one is for you! Before you decide not to file your ITR, hear me out about the consequences of not filing your ITR on time.
So, what is ITR? Who needs to file it, and what happens if you do not file your ITR? Well, an income tax return is a document that helps the government understand your earnings. If you fail to notify the government, you may face penalties and troubles in the future as a result.
Delay in filing ITR attracts interest and penalty.
What Are the Benefits of Filing Tax Returns?
It's easier to receive a loan from a bank or a financial institution.
Individuals can seek tax refunds.
It can be used as proof of income.
Allows for speedy visa acceptance and processing.
Allows losses to be carried forward.
To be compliant and on the right side of the law, it's necessary.
What Happens If People Don't File Their ITR?
If you don't file your income tax returns on time, you may face some significant problems.
Penalty
A penalty is imposed if one fails to file income tax returns till the due date. Late fee of Rs. 5,000 if a return is filed after the due date. However, if the total income is less than 5 lakhs, the maximum penalty levied for delay will be only Rs. 1000/-.
Interest on Tax
If an individual or business fails to file their income tax return on time, they will be charged interest at 1% each month until they do so. The stated interest is calculated after subtracting the tax deducted at source, tax collected at source, advance tax, and any tax credits allowed under the legislation from the tax payable.
Losses not Carried Forward
If an ITR isn't submitted by the due date, the taxpayer won't be able to carry forward any losses under the head “Profits and gains of business or profession“ or “capital gains.” However, unabsorbed losses under the title “Income from home property“ may be carried forward.
Delay in the Return of Income Method
The Income Tax Department processes the Income tax return only after it is filed and e-verified as well. The taxpayer's tax liability or refund is determined only once this processing is complete. As a result, if the taxpayer is seeking a refund, late submission of the income tax return will result in delayed credit of tax refund.
Conclusion
Thus, Filing of ITR has many financial and non-financial benefits and one must file the ITR on timely basis to avoid undue penalties.
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