2 Reasons Why You Must File Your ITR Before The Deadline December 31

Submitting ITR to the government on or before the deadline is the responsibility of every taxpayer. To prevent any penalties in the event of a failure in filing income tax each year, it is best to be cautious. In the aftermath of the covid-19-induced lockdown, the last date for filing late or amended ITRs for AY20 has already been postponed multiple times this year. On Saturday, for that taxpayer, the income tax return department again extended the ITR filing due dates for AY 2020-21 (FY 2019-20) from 30 November to 31 December 2020 for that taxpayer where the tax audit is not relevant. The last return filing deadline has been postponed from 31 October 2020 to 31 January 2021 for individual taxpayers who need to have their records audited. Yet waiting for the last day to file the income tax return would not need to be helpful for each taxpayer, let’s check out the reasons for the same.

Delay in ITR filing means a pause in claiming tax refunds

For their refunds to be released earlier, taxpayers who are seeking refunds can file early. ITR filings submitted earlier are validated earlier, leading to faster refunds for tax. It normally takes about one month for the tax department to issue refunds. When a taxpayer requires a refund of excess tax, TDS or TCS, an early ITR filing allows the refunds to be processed early. Up to a certain duration, ITR filing after the due date is also permissible. In this situation, however, taxpayers are required to pay a penalty. Under the Income Tax Act, not filing returns at all could incur punishment because tax avoidance is a criminal offence.

Pay higher interest according to Section 234A

A citizen whose tax liability surpasses Rs.1 lakh and who is not necessary to verify the accounts must not wait until the last date to file an ITR to reduce the outgoing interest pursuant to section 234A of the Income Tax Act. Those persons who are not required to have their accounts verified but whose self-assessment tax liability surpasses the Rs.1 lakh cap must not wait until the extended due date of 31 December 2020 however, in this situation, the interest alluded to in section 234A is charged from the due date of 31 July 2020 until the effective date of filing of the return on income tax. In order to mitigate the interest under Section 234A, such a taxpayer should then file his income tax return as soon as possible. For all taxpayers whose self-assessment tax liability does not surpass the cap of Rs.1 lakh, interest u / s 234A shall be charged from the modified due date of 31 December 2020 to the effective date of filing ITR.

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