Why should we file our Income Tax Return on time

Tax filing time is back again. Yes, it’s that time of the year when we have to file our income tax. For many of us, filing tax returns can be a tedious process. Although, the government has simplified the tax filing process making it much easier and less cumbersome for taxpayers to file returns many of us still find it difficult to understand.

It may be simple for few and complex for others however we should not delay it which can cost us dearly.

For this year government notified a simpler one-page form for filing your tax returns. Along with this, quoting Aadhaar number is now mandatory. Linking Aadhaar can now be completed in a few simple steps. By linking your Aadhaar, we can e-verify our returns, without having to send the physical return form for processing, thus, adding to the convenience.

Income Tax Filing Dates

July 31, 2017	Due date for filing annual return of income for the assessment year 2017-18
	for all assesse other than –
	(a) corporate-assesse or
	(b) non-corporate assesse, whose books of account are required to be audited
	or
	(c) working partner of a firm whose accounts are required to be audited or
	(d) an assesse who is required to furnish a report under section 92E
September 30, 2017	Due date for filing annual of income for the assessment year 2017-18 if the
	assesse is –
	(a) corporate-assesse or
	(b) non-corporate assesse (whose books of account are required to be audited)
	or
	(c) Working partner of a firm whose accounts are required to be audited).

Why we should file it on time, here we have outlined few major reasons to file our income tax return early –

1. Fast processing of IT returns

If we file our returns well before deadline dates, our files are processed much faster. As we approach closer to deadline dates the processing time increases due to increase in volume.  Further the servers also slows down due to due to heavy volume as the tax return deadline comes nearer. So it it always advisable to file the return well in time so as to avoid the rush and possible delays.

2. Reducing the chances of errors

If we start working on our returns early we get enough time to gather all the information and enough time to do it properly and error free. When we file in last minutes, in haste, we may forget to include certain incomes/exemptions resulting into a wrong information. Although we can file a revised return before the end of the next assessment year, which is March 31, 2019 for AY2017-18. But it is always advisable to file the things correctly at first time itself.  Further from next year the deadline for filing revised returns has been reduced, i.e. AY2018-19, the deadline for filing revised returns is March 31, 2019. So it’s better to start early so as to avoid errors and delays in processing.

3. Refunds are faster
Normally the IT refund processing takes more time than processing forms with a tax due. So If we file your claim in advance and have a tax refund, our return may get processed faster. As the time goes by, it may get delayed due to the rush. So if we get our refunds sooner we can put it to productive use early and reap earnings. The longer we delay, means missing out on the income which could be earned on that amount. Further, if our refund amount is greater than 10% of the tax payable, government pays an interest @6% p.a. calculated from the date of filing the return. We lose this benefit if the returns are filed after due date.

4. It gives sufficient time to get all documents in order

We need to collect all the required documents i.e. income details, home loan EMI details, various tax savings investments, accrued income, TDS certificates, Form 26AS etc. before filing our IT returns. By starting for our income tax preparation early, we will get enough time to gather all these documents from various sources. Although we are not required to attach these documents however there details are necessary to complete the returns so we need to have all the details with us before filing the returns.

5. This will avoid late payment and penal interest

As per Income tax Act if we file the returns after due date we are liable to pay interest and also penalty. Under Section 234F of the Income Tax Act) there will be two set of penalties, first, a Rs 5,000 penalty for belated returns filed on or before December 31 for that assessment year and Rs 10,000 for any other case. For small taxpayers whose total income does not exceed Rs 5 lakh, the penalty amount is reduced to Rs 1,000. Apart from this, under Section 234A, interest would be levied @1% per month, calculated from the due date. So there is another advantage of filing returns well in time so as to avoid this extra cost.

6. Your Tax Consultant will pay more attention

If you file the return through Chartered Accountant or some professional, by reaching them well before the deadline you will get sufficient time to discuss with them and they will give you good hearing. This will also give them enough time to examine your documents and eradicate errors and/ or be able to save you more tax.. In last moments they are also filled with lot of files and may not be able to pay as much attention.

7. Faster processing of loans, visa, credit cards

Currently IT return is compulsory for getting loans, credit cards and most of the financial services. Because income tax return acts is proof of the income we earn. Therefore, if we are planning to take home loan or any other financial services, it is pertinent to have all your income proofs ready. In addition, paying your tax on time adds to your credentials as a trustworthy and law-abiding citizen.

8. It gives ideas for future tax planning

When we file returns early, we may get ideas on how to save tax in the current financial year. As every year the tax rules changes; thus, filing returns early, may give ideas on how to save on tax for the current financial year. By tis we can optimise tax deductions available. In addition, we can negotiate with our employer to alter and optimise your salary structure to save more tax. 

9. It eliminate stress

When we do anything in last moment it increases our stress level and chances of mistakes are also high. So by filing the returns on time we can avoid the additional stress of missing the due date or being charged a late fee and penal interest. Stress has been known to adversely affect our health. By submitting our tax returns before the deadline, we will be happier with a host of benefits.

We should have a proper and well planned tax planning at the start if the year. Tax planning is not just tax saving or filing returns and paying taxes but a larger financial plan which should be taken into consideration after accounting for age, financial goals, ability to take risk, and investment horizon (including nearness to financial goals).

We must file your tax returns on time and should also ensure that taxes are paid before the due date. This will not only provide you with several benefits, but also defer additional costs in the form of penalties that can arise later.