Why Delaying Income Tax Return Filing Until 15 June Might Be Wiser
Introduction: The income tax return (ITR) filing for the financial year 2023-24 (current assessment year) was opened in the first week of April. Although this is earlier than usual, there are compelling reasons to delay filing until 15 June.
Reasons to delay ITR filing until 15 June
- TDS Reporting Exercise by Banks Finishes by 31 May: Banks and other entities report the tax deducted at source (TDS) on interest income on fixed deposits and savings accounts, which is necessary for tax filing, and this exercise finishes by 31 May.
- Employers Start Releasing Form16 in the First Week of June: Salaried individuals receive their Form16 from their employers in the first week of June, which contains all the information related to tax exemptions, deductions, and TDS.
- Statement of Financial Transactions (SFT) Gets Finalized by 31 May: SFT captures high-value transactions related to credit cards, buying or selling bonds, shares, or mutual funds, and cash deposits, among other transactions, aggregating to over ₹10 lakh each. This information is necessary for tax filing, and it usually gets finalized by 31 May.
- SFT, TDS, and TCS Data Takes Additional Time to Reflect in Form 26AS and AIS: SFT, TDS, and TCS data and details related to other incomes take an additional 10-15 days to reflect in Form 26AS and the Annual Information Statement (AIS). As a result, AIS will not be up to date, and taxpayers will end up filing ITR with incorrect information.
- Mismatch Notice from the IT Department: In most cases, ITR filed before 15 June will get a mismatch notice from the IT department. Even if the taxpayer has all the necessary documents and is confident about filing accurate information, they may still get a mismatch notice as the AIS will be outdated.
- No Penalty for Mismatch Notice: A mismatch notice does not entail any penalty, but it creates the hassle of filing a revised return before the due date of 31 December. In some cases, where the mismatch notice gets delayed and is sent after the due date, the taxpayer will have no option but to file an updated return that carries extra cost.
- Revised Return Attracts 25% Tax on Outstanding Amount: In an updated return, a taxpayer must pay an additional tax of 25% of the aggregate of tax and applicable interest on the outstanding tax, if any.
Reasons to file ITR early
- Claim Huge Refund: Taxpayers who have a huge refund to claim can file their tax return early to get the refund early.
- Non-Resident Indians (NRIs): NRIs who have to part with 30% TDS on the sale of property or taxpayers who paid a 20% TCS on remitting money outside India under the LRS can file their tax return early. However, they should provide correct information and revisit the ITR later.
Conclusion: Taxpayers have until 31 July to file ITR, but they should check the relevant ITR form in advance and prepare the required documents. By delaying tax filing until 15 June, salaried individuals can reconcile all the necessary details to avoid discrepancies and hassle later on. Non-salaried individuals with only capital gains can file an early ITR, but only if they did not sell a capital asset in the last quarter of FY 2023 as it may not reflect in AIS yet. By following these guidelines, taxpayers can minimize errors and avoid penalties.
Disclaimer:
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
