NEW DELHI: As the deadline for filing income tax returns on July 31 is approaching, it’s essential for individual taxpayers to submit their ITR in advance to avoid last-minute rush. Filing your Income Tax Return (ITR) is essential for several reasons. It ensures compliance with the law, helping you avoid penalties for late submission.
By filing on time, you can claim any eligible tax refunds while also providing important financial documentation for loans or other transactions.
Additionally, regular filing builds a strong financial history, which can be beneficial in the long term.
It is to be noted that under the new tax regime, individuals with a net taxable income of up to R7 lakh are eligible for a tax rebate under section 87A. For those opting to pay taxes under the old regime, the rebate limit remains at R5 lakh.
Importance of filing ITR
In case an individual has no taxable income or when her total income is below the taxable threshold set by the government, even then she should file a Nil Return. It is important to file such a return to fulfil the legal requirement of submitting an ITR and to maintain a record with the tax authorities, even if no tax is payable. Filing a Nil Return ensures compliance with tax regulations and helps in documenting your financial status for that particular financial year.
“It’s preferable to file as IT returns also work as a document of history of a person’s income and it can help in obtaining a loan,” said Pritam Mahure, Partner with CA Pritam Mahure and Associates.
The new tax regime has been made applicable as a default regime from the Financial Year 2023-24 and the Assessment Year 2024-25. However, taxpayers can choose the tax regime (old or new) that they think is beneficial to them.
The Finance Ministry had clarified that the option for opting out from the new tax regime is available till filing of return for the AY 2024-25. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose the new tax regime in one financial year and the old tax regime in another.
To file your ITR, you typically need Form 16 (TDS certificate issued by your employer), details of other income sources (such as interest on FDs, rental income), and your PAN card. If your income is substantial, seeking the assistance of a tax professional can be beneficial to minimise errors and optimise tax planning. However, if you choose to file your own return, it’s important to reconcile your income details from TDS forms (such as Form 26AS) and your bank statements to ensure accuracy.
“If your salary is running in millions then it is preferable that support of a tax professional is taken, as it could help in mitigating basic errors and optimising tax,” said Mahure.
According to Manmeet Kaur, Partner at Karanjawala & Co, it is important to do the tax filing within deadlines given by authorities for individuals and register on the Income Tax e-filing portal, if not already done.
“Calculate your total income from all sources such as rental income, capital returns etc. Also, gather all necessary documents such as bank and credit card statements including investments and deductions under sections 80C, 80D, 80E, 80TTA, etc. Further, collect relevant TDS certificates (Form 16, Form 16A, and Form 26AS). You should have bank account details for refund processing, if any.”
After taking into consideration all aspects, determine your tax liability and choose the appropriate ITR form and fill out the ITR form online or use tax filing software. One should double check the pre-filled details in the ITR form.
“After verifying the particulars mentioned in your return (via Aadhaar OTP, net banking, etc.) submit your ITR,” Kaur added.
Further, for individual professionals having income more than R50,00,000 per annum, the audit is mandatory under the Act. The individual who is a professional falling under this category should have the audit done from a chartered accountant (CA) after considering all the above factors. Thereafter, the return can be filed with the auditor’s report, she stated.
Belated return
For the Financial Year 2023-24 (Assessment Year 2024-25), the deadline to file Income Tax Returns (ITR) is July 31, 2024. In case of missing this deadline, individuals can still file a belated return before December 31, 2024. Late filing may result in an interest charge of 1% per month on the unpaid tax amount as per Section 234A.
Additionally, under Section 234F, a late fee of R5,000 is applicable, which is reduced to R1,000 if the total income is below R5 lakh.
Furthermore, individuals have the option to carry forward losses from sources like the stock market, mutual funds, properties, or businesses to offset against future income tax liabilities, provided the ITR is filed before the deadline.