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WHY FILE INCOME TAX RETURN (ITR)?

Filing your income tax return is important to follow the rules of the Income Tax Act, accurately report your income, claim tax benefits, and meet your tax responsibilities. Not filing or providing incorrect information could lead to penalties or legal consequences.

ADVANTAGES OF ITR FILING

• RESPONSIBILITY OF EVERY PERSON

Filing ITR is a obligation for many; exemptions is relevant for a few categories however others should document and pay taxes on time.

• SMOOTH PROCESSING OF APPLICATIONs

Timely ITR allows attain loans/visas, serves as profits proof; absence may also motive problems in such applications.

• NO PENALTIES

Non-submitting of ITR draws consequences i.e. minimal Rs. 5,000, plus hobby below segment 234A, ensuing in needless expenses.

• CARRY FORWARD OF LOSSES

Filing ITR permits sporting ahead capital losses for destiny modifications in opposition to capital gains, thereby maximizing tax benefits.

• CREDIBILITY

Timely ITR submission demonstrates accountable nature, sturdy economic record, establishes credibility, and high-quality reputation.

• CLAIMING OF REFUND

Timely ITR submitting is needed to assert refund for extra taxes paid via TDS/strengthen tax, making sure well timed receipt of overpaid taxes

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Who should file an ITR return?

The Income Tax Department has asked the following taxpayers to file an annual IT return.

• Employees

If your gross income exceeds the allowable amount before deductions under Sections 80C to 80U, you have to file an ITR return.

• Form 16?

Form 16 is a certificate stating the salary earned by an employee and details of her TDS deducted by the employer.

If the salary income exceeds the basic allowance, the employer has to deduct TDS from the salary at the time of payment and remit it to the government on time.

Employees receive this form from their company each year to attach to their tax returns.

Form 16 consists of two parts.

Part A includes employer and employee names, addresses, PAN numbers, TAN numbers, and taxes deducted and paid.

Part B specifies employee allowances, fringe benefits, and other benefits and deductions allowed under the Income Tax Act.

• Non-individuals

All companies, whether private limited companies, LLPs or partnerships, are required to file an IT return irrespective of whether they have made a profit or loss.

• Director/Partner

An individual who is a director of a private limited company or a partner of a private limited company is also required to file her IT return.

• If you have income from other sources

If you are earning dividends from mutual funds, bonds, stocks, fixed deposits, interest or any other sources, you have to file an IT return.

• Income from Charitable Organizations or Voluntary Donations

If you receive income from charity or religious organizations and income from voluntary contributions, you will have to file an IT return.

• Foreign Income

NRIs and local technical experts and all persons with foreign income or assets are required to file an IT return.

• Other situations in which filing of ITR is mandatory
• If you have deposited an amount exceeding Rs.1 crore in one or more current accounts during the financial year
• If you are seeking tax refunds, whether you are an individual or a business, then you must file IT returns.
• If you have paid an electricity bill exceeding Rs. 1 crore in a single bill or on an aggregate basis during the financial year.
• If you have spent Rs. 12 lakh or more on foreign country travel.
• If you hold any asset outside India or have signing authority in any foreign account.
• If you're total sales or turnover in a business is Rs 60 lakhs or more during the financial year.
• It is always advisable to file ITR even if you are not required to do so, as it helps in building a good credit history and may be required as proof of income in various situations like availing loans, obtaining visas, etc.

Consequences of Not Filing ITR within the deadline

Failing to submit your tax return within the deadline can lead to a number of unfavorable circumstances:
If you fail to file your ITR within the due date, you may have to pay a late filing fee of up to Rs. 10,000 depending on the delay in filing.

You will not be able to offset any losses other than those arising from property loss against future gains. This can lead to an increase in your overall tax liability.

You will also be charged interest under Section 234A at a rate of 1% per month or part of a month on any outstanding tax due until payment is made. It's important to remember that you can't file your ITR unless you've paid your taxes in full, and the longer you delay, the more interest you'll accrue.

If you're entitled to receive a refund for excess taxes paid, filing your returns before the deadline will ensure that you receive your refund sooner. However, if you miss the income tax filing deadline, your refund may be delayed, causing further inconvenience. You will not receive your refund untill you file the ITR.

Legal consequences:
The income tax officer may start prosecution proceedings against you if you intentionally refuse to file a return, despite receiving reminders. If convicted, you could be imprisoned for up to two years, and fined up to 50% of your due tax. The period of prosecution could even extend to seven years if you owe a significant sum to the department.
Therefore, in a nutshell, timely filing of your ITR not only ensures that you meet your legal obligations, but it also safeguards you against unwanted legal and financial consequences.

ITR Forms and their Due Dates for AY 2024-25