What is Income Tax Return?

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An Income Tax Return (ITR) is a form used to submit information about your income and taxes to the Income Tax Department. A taxpayer’s tax burden is determined by the amount of money earned. According to Indian tax regulations, if your income exceeds the basic exemption level, you must submit an ITR. For taxpayers, the income tax rate is predetermined, and any delay in filing returns will result in late filing penalties. There are seven types of ITR forms for various categories of individuals.

The Government of India has enacted Income Tax rules that regulate the taxes paid on the taxable income of all people, Hindu Undivided Families (HUFs), companies, firms, LLPs, associations of persons, bodies of individuals and any other juridical person. Every person who qualifies as an Indian resident is obligated to pay tax on taxable income. Every fiscal year, taxpayers must file Income Tax Returns as per the rules and guidelines.

What is advanced tax?

The amount of income tax paid in advance rather than in a lump sum payment at the end of the year is referred to as an advance tax. Advance tax, sometimes known as earn tax, is paid in instalments according to the income tax department’s deadlines.

Impact of delay in filing ITR

Section 234F of the Income Tax Act went into effect on April 1, 2017. The requirements of this section apply only if the following conditions are met:

1. If the assessee has not filed ITR in accordance with Section 139

2. If the assessee fails to file ITR on or before the relevant due dates

Section 234F applies to all types of people, including individuals, HUFs, Associations of Persons (AOPs), Body of Individual (BOI), corporations, partnerships, and limited liability companies, if the ITR is submitted after the corresponding due dates. The section has implemented a late charge to guarantee that returns are filed on time.

Late fee according to IT Section 234F

1. If the assessee’s total income exceeds Rs. 5 lakh –

  • Rs. 5,000 – ITR filed on or before December 31
  • Rs. 10,000 – ITR filed after December 31

2. If the assessee’s total income is less than Rs. 5 lakh –

  • The maximum fee payable is Rs. 1,000.

Aside from the late filing charge, the assessee risks the following repercussions for late submission of returns:

  • Unable to trigger losses
  • Penalty for late filing of return
  • Postponed refunds (if applicable)

Consequences of failing to file by the deadline

Aside from the penalty imposed by the IT Department, a taxpayer may suffer the following repercussions for late submission of returns:

1.     Cannot set off losses

Losses are not allowed to be carried over to the following years (save for home property losses). If the return isn’t submitted by the deadline, you can’t use the losses to offset future profits. If there are losses under home property, however, losses can be carried forward.

2.     Interest accrues if a return is not filed on time

Apart from the penalty for late filing, interest at 1% per month or portion thereof shall be levied under section 234A until the taxes are paid.

It’s crucial to remember that you can’t submit an ITR unless you’ve paid your taxes. Interest will be calculated from the day that falls immediately after the due date, i.e., August 31, 2019, for AY 2019-20. As a result, the longer you wait, the more you will have to spend.

3.     Refunds get delayed

If you are eligible for a refund from the government for overpaid taxes, you must complete your returns before the deadline to get your refund as soon as possible.

The advantages of filing ITR on time

The assessee can profit from the following advantages if ITRs are filed on time:

  • Quick loan approval
  • Tax refund claim
  • Visa processing in record time
  • Losses carried forward
  • Avoid punishment and prosecution

Many taxpayers assume that once their taxes are paid, they are free of future obligations. Missing the ITR filing deadline, on the other hand, carries legal ramifications. You can always use an income tax calculator available online to find out your tax incurred. So, file your returns before the deadlines to avoid paying fines and other consequences.

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