Along with a diversified financial portfolio and equal importance to health and life insurance, it is equally important to ensure that you understand your tax* liabilities and file your ITR (Income Tax Returns) on time. Income tax filing allows you to declare your income, investments, any deductions, exemptions and payable tax/refunds, thereby allowing you to plan your finances better.

The Indian Income Tax Act of 1961 lays down the major rules and guidelines for tax filing in India. One of the primary rules for tax filing to remember is the ‘last date for tax filing’. To ensure no late filing fines, it is important to know the last date for your ITR filing online or offline and file your ITR on time.

What is ITR or Income Tax Return Filing?

Income Tax Return filing is filing a form where you provide detailed information to the government about your various sources of income, tax-saving investments, payable tax, any refunds, etc.

In India, it is the responsibility of every citizen to pay taxes to the government based on the level of income each earns. The tax you pay allows the government to fund important expenses, such as public development projects, health infrastructure, welfare schemes, police services, armed forces, etc. To incentivise tax filing, the government offers a wide list of financial products that help you save on taxes.

The Income Tax Department offers seven tax forms - ITR 1 to ITR 7 - based on the type of income and filing entity to streamline tax filing. Additionally, by digitising the entire process, the IT department allows e-filing income tax from the comfort of your home on the income tax filing portal.

What is the Last Date to File ITR?

Under Section 234A of the Income Tax Act of 1961, the ITR filing last date refers to the date by which an entity can file ITR returns without incurring any fees/penalties. The last date for filing your tax return depends on the type of returns (regular /correction), income source (salary/profits from business), and filing entity (business-owner/individual/HUF).

Generally, for individuals, the last date for filing is the 31st of July in the following financial year. For partners of a firm, corporate/non-corporate assessees, etc. the last date for ITR filing is the 30th of September.

However, the government offers multiple extensions every year, as it did during 2020 amidst the first COVID wave, to provide ample time for tax filing.

Reasons to File ITR on Time

With the ease and convenience of e-filing income tax facilitated by the Income Tax Department’s online income tax filing portal, it is easier to file your taxes on time. Here are the top 3 reasons why you should file your ITR before the due date:

• To avoid fines and audits:
  
  

  Under Section 234F of the Income Tax Act, you are liable to pay a fine of ₹5,000 if you file your ITR late. The fine amount is ₹1,000 for individuals with a salary lower than ₹5,00,000. A belated return, as a late ITR filing is called, does not attract any legal repercussions. Also, you will not get any interest on the refund in case of excess taxes paid, if the ITR filing is delayed.
  
  

  Recurrent late filings might lead to audits. To avoid all this, it is advisable to pay your taxes on time.
  
  

• To process loans faster:
  
  

  An ITR provides a detailed picture of your total income, investments and tax liabilities. A financial institution checks your ITR to determine your eligibility before approving a loan. Constant late filings can portray you as irresponsible and reduce the bank’s trust in your ability to make payments on time.
  
  

  Therefore, it is important not only to pay all your taxes on time but also to maintain detailed copies of all your ITRs. Regular and well-kept records help in the faster and more efficient processing of loans and advances from financial institutions.
  
  

• To claim tax refunds:
  
  

  There are certain investments that involve Tax Deducted at Source (TDS), i.e., the provider will deduct the applicable taxes on your income/earnings before paying you the amount. But, if your total income falls under the tax-exempted bracket, then you have to claim a refund for the TDS paid.
  
  

  For this, you need to file a tax return and apply for a tax refund. To get the excess tax refunded, it is essential to file your taxes on time.
  
  

Documents Required to File ITR

If you are e-filing income tax online, you need the following documents:

• PAN Card
• Form 16
• Aadhar Card with an authorised and valid mobile number attached to it
• Previous years’ tax returns
• Bank statements
• Interest Certificate - summing up all the interest earned in the previous financial year
• TDS (Tax Deducted at Source) details
• Proof of all the tax-saving investments made - for instance life insurance policy document, ELSS mutual fund statement, and so on.
  

These documents are only for your reference and they do not need to be attached or affixed anywhere in case of either ITR filing online or offline. However, it is important to download and maintain the records of all the income and investment details, along with the proof of filing ITR for any future scrutiny, audit or evaluation.

What is the Verification Part of Your ITR Filing Online and Offline?

No ITR filing is treated as completed or valid without the final stage of VERIFICATION. It is the final stage of your ITR filing when you collate all the documents and verify them with a signature. It is like self-attesting that the information provided is true.

You can choose to proceed with the ITR verification either online or offline. Online verification can be done via Aadhar Card-linked OTP or through net banking. For offline verification, you need to download and print all the relevant documents, sign them and send them to the Income Tax Department’s Central Processing Centre (CPC) in Bangalore.

Conclusion

It is a common belief that if your income falls below the taxable limit you do not need to file your ITR. However, if you wish to apply for tax refunds or claim any deductions/exemptions, it is advisable to file your ITR online on time. It is extremely easy and convenient to file ITR online on the Income Tax Department’s income tax filing portal.

Along with timely ITR filing, it is important to streamline all your tax-saving investments on time. Never wait for the last minute to invest in tax-saving instruments as that may lead to hasty investments in incorrect or even fraudulent avenues.

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L&C/Advt/2022/Jun/1240