Three reasons to file income tax returns on time
The last date to file your income-tax returns (ITR) is usually 31 July, unless it is extended by the income tax department. From the assessment year 2018-19, if you don’t pay your tax on or before the deadline, you will have to pay a penalty of up to Rs 10,000 for late payment. If you file returns after 31 July and on or before 31 December, you will have to pay Rs 5,000 as penalty. However, if you file returns after 31 December, you will have to pay a fine of Rs 10,000. This penalty is applicable for those who have a taxable income of more than Rs 5 lakh. If your taxable income is up to Rs 5 lakh and you have delayed your ITR, you will have to pay Rs 1,000 penalty.
1% interest a month
If you don’t pay on time and also have tax due, then besides the higher penalty of Rs 5,000 or Rs 10,000, whichever is applicable, you will also have to pay 1% penal interest on the tax amount that is due. Say your taxable income is Rs 10 lakh and your unpaid tax amount is Rs 20,000. If you file returns on 1 January, you will have to pay an interest at 1% for August to December. For five months, you will pay Rs 11,000
(Rs 1,000 as penal interest plus Rs 10,000 penalty).
Must for other services
It is important to file returns because you may be asked to provide income tax returns details to avail of various services. For instance, some countries ask you to furnish three- to five-year income tax return details as part of the visa issuing process, which you have to submit to the visa authorities. Another place where you may have to provide ITR details is to process home loan from financial institutions. Through your income-tax returns, the authorities are able you understand your income flow and decide whether they want to lend to you or not.