Income Tax Return was earlier known as ITS, is a summary of an individual’s income and investment during the financial year. It acts as a document in which an individual discloses his earnings and income sources for that matter. According to the Income Tax law, when an individual’s income extends the exemption limit or when he started earning more than the maximum non- chargeable to tax, he has to file the details regarding income details and tax payment details. Therefore, it is the duty of Income Tax Department to remind everyone of filing the income tax returns. There are various slabs of taxes based on the yearly salary of an individual for different income slabs. Meanwhile, ITR consists complete data provided by assesses and there are total 7 forms of Income Tax Return through which help an individual to choose a particular form according to his situation.
At the same time, despite the reminders of Income Tax Department if you pay late then you will be liable for penalties under provisions of income tax act. To avoid them you ought to file your income tax returns before the deadline i.e. 31st July 2019. However, if you are still taking it lightly then we would like to tell some consequences which may push you to file income tax returns on time.
THREE- TIER FEE SYSTEM
Income Tax Department has maintained a three- tier tax system for those people who do not file the income tax return within the stipulated date. This would also called as penalty in simple word. For an instance, if an individual files the ITR after the due date but before 31st of December then he would require to pay Rs.5,000 along with the previous money which he had to pay. On the other hand, if he files ITR after 1st of January then Rs.10,000 will levy on him as penalty. However, in cases where the income tax return of taxpayers does not exceed Rs. 5 lakhs, the fees payable is Rs. 1,000.
But this system has been made to make people aware of their duties towards the country. As we all know that this is the biggest source of income for the Government of India. They utilise this money in the development of the country. For example, various toilets, government schools and hospitals. Therefore, if you want to avoid these heavy penalties you must file the ITR on time.
LESS TIME LIMIT
Lets say if you file the Income Tax Returns before the due date but has subconsciously end up with few mistakes. What will you do in that situation? Don’t worry because you will have enough time to undo the mistakes. But on the other hand, we are aware of the fact that there are total 7 forms of ITR and their features change from time to time. Normal people don’t have a general knowledge regarding this episode. Therefore, it becomes necessary to file ITR on time so that you will have enough time to correct your mistakes if you make any. As you only have time till March 2019 to make the change. Otherwise, you are only limiting your time which can have bad consequences.
INTEREST TO BE PAID ON TAX AMOUNT
When you don’t file income tax return within the due date, interest at the rate of 1 per cent per month or part of the month is levied up to the date of filing the ITR. The said interest is payable on tax payable after deducting the TDS (tax deducted at source), TCS (tax collected at source), advance tax and other reliefs/ tax credits available under the law. TDS is deducted by buyer or payer while TCS is collected by receiver/payee/seller.
Therefore, it becomes hard for common people to face the interest rates that too in bad conditions. If you don’t want to face this situation then file ITR on time and hence, you will save yourself from high interest rates. As a result, you can may utilise the remaining money for yourself and your family.
YOU WILL GET NO LOANS
We all know that filing the ITR isn’t an exciting activity but it may hurt us even more when it becomes a documentary need for the procedure for availing loans. You need to keep in mind that your loan application will get rejected if you don’t file ITR along with your request to get a credit card. Filing the ITR is important for getting your VISA done. Although, it hasn’t made mandatory yet to show your ITR but still you might have been asked for this in various places. Therefore it can become an obstacle in the future.
BAR ON THE CARRY FORWARD LOSSES
If income tax returns are not filed before the due date then the person filing the income tax return after the due date will not be permitted to carry forward any losses which are normally allowed under the head of “profits and gains of business or profession” or “capital gains”. However, unabsorbed depreciation is permitted to be carried forward under the head of “income from house property”.
Hence, we do suggest you that avoid all these circumstances by filing ITR before the deadline.