In most cases, the deadline for filing a tax return is July 31. There are only three weeks left to file your tax return this year. While tax laws allow for late filing, you will miss out on several benefits that are only available to those who file on time. A person has two years to file a late income tax return, but this law was amended in this year’s Budget, and the time limit for filing a late return was cut to one year. This new rule will take effect in April 2017. For business tax returns online, click here and know more.
Losses can be carried forward for up to eight years to be offset against future capital gains. However, you can only do this if you file your tax return on time. You will not be able to carry forward any losses if you file a late return.
- Delay in receiving a refund: If you have an outstanding tax demand, or if you have paid too much tax, you can only receive your money back by filing a tax return. In addition, if your refund is delayed, the tax department is responsible for paying interest on the refund from the day it is due. However, if you file your return late, you will only be charged interest from the time you file your return until you receive your refund. There will be no interest paid for the time you were late.
- Proof of income: Your tax return is evidence of your earnings. If you request for a loan, a bank may want your most recent tax return as proof of income, and if you apply for a visa, your income tax returns may be required to determine your financial situation.
- Avoid penalties: If you wait too long to file your tax return, you will be charged interest at the rate of 1% per month on the amount owed until the tax return is filed. In addition, if you fail to file your tax return, the IRS may charge a penalty of up to $5,000. There are options for harsher sanctions and even prosecution in the case of willful delays.
- Loan Approval Is Simple. Individuals will benefit from filing the ITR when applying for a vehicle loan (2-wheeler or 4-wheeler), a home loan, and so on. As proof of income statement, all major banks might request a copy of tax returns. This is a document that must be submitted in order for the loan to be approved.
- Obtain a Tax Refund. Even if your total taxable income is less than the basic exemption limit and you have no tax liability for the year, tax may have been deducted (TDS) from your earnings. You will have to claim a TDS refund in this scenario, and you will be required to file an Income Tax Return.
- Visas are processed quickly. Most embassies and consulates require you to submit copies of your tax returns for the previous two years when applying for a visa. These are among the legally required documents, thus it is always a good idea to file your ITR on time.
- Carry Your Losses Forward. If you file your return by the deadline, you will be eligible to carry over losses to future years, which you can use to offset future income. This means that you can deduct certain losses from the relevant income, lowering your future income tax bill. This isn’t feasible without submitting a tax return.