5 reasons to file your income tax returns on time

1. NEW LAWS AND PENLATY

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 Rs10,000 for late payment. If you file returns after 31 July and on or before 31 December, you will have to pay Rs5,000 as penalty. However, if you file returns after 31 December, you will have to pay a fine of Rs10,000. This penalty is applicable for those who have a taxable income of more than Rs5 lakh. If your taxable income is up to Rs5 lakh and you have delayed your ITR, you will have to pay Rs1,000 penalty

2. MONTHLY INTEREST

If you don’t pay on time and also have tax due, then besides the higher penalty of Rs5,000 or Rs10,000, whichever is applicable, you will also have to pay 1% penal interest on the tax amount that is due. Say your taxable income is Rs10 lakh and your unpaid tax amount is Rs20,000. 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 Rs11,000.

3. CARRY FORWARD OF LOSSES

All capital losses are allowed to be carried forward to the next year only if return is filed by the due date (31st July), except under heads of house property and unabsorbed depreciation, which can be carried forward.

4. AVOID NOTICES FROM INCOME TAX

Even if all taxes are paid, an ITR has to be filed, especially if you have been regularly doing so in the past and to avoid getting a notice if a gap in continuity is found later

5. HOME LOANS AND TRAVEL

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 reason where you may have to provide ITR details is to process home loans from financial institutions.