The deadline for filing Income Tax Returns (ITRs) for the fiscal year 2022-23 is July 31, while the new assessment year 2023-24 will commence on April 1. Filing income tax returns on time is an essential responsibility of every taxpayer. It is a legal obligation, and failing to comply with it can result in various consequences, including financial penalties and legal actions.
Below are some reasons why filing income tax returns on time is crucial:
- Avoid Penalties: One of the most crucial reasons for filing income tax returns on time is to avoid penalties. If you fail to file your income tax returns on time, you may have to pay a penalty, which can be significant. The penalty can range from a fixed amount to a percentage of the tax owed, and it can increase over time if you continue to delay.
- Faster Processing of Refunds: If you are due a refund, filing your income tax returns on time can ensure that you receive your refund faster. The sooner you file your returns, the sooner the tax authorities can process your refund.
- Creditworthiness: Filing income tax returns on time is essential for maintaining your creditworthiness. Many financial institutions, such as banks and credit card companies, require income tax returns as proof of income. Failing to file your returns can impact your ability to obtain loans, credit cards, and other financial products.
- Avoid Legal Issues: Failing to file your income tax returns can result in legal issues. The tax authorities can take legal action against you, and you may be required to appear in court. The legal process can be stressful and time-consuming, and it can also result in higher penalties and fines.
- Compliance with the Law: Filing your income tax returns on time is a legal obligation, and complying with the law is important. As a responsible citizen, you have a duty to pay your taxes on time and contribute to the development of the country.
Here’s what expert Amit Gupta, MD, SAG Infotech has to say: “Many people avoid filing income tax returns entirely because they find the process to be cumbersome. Contrarily, because ITR are recorded with the government and used as legal evidence, income tax returns carry significant legal weight. As filing income tax returns annually is a crucial part of being a good citizen, it is a moral requirement of every working Indian. The government accepts the return as proof of address in a number of circumstances, including when applying for an AADHAR card or other documents, in addition to serving as a type of identification evidence.
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The Income Tax Return (ITR) form, as previously mentioned, contains a thorough analysis of your income and expenses, which is then utilised to determine the amount of tax due. In order to reward and lighten the load of taxpayers, the government offers unique deductions. Nonetheless, you must file your income tax returns in order to benefit from these tax advantages. Your ability to claim deductions may be affected if you fail to comply. Your taxes are governed by the Income Tax Act of 1961, and if your income is more than the exclusion amount, you are required to pay taxes”.
In conclusion, filing income tax returns on time is crucial for avoiding penalties, maintaining creditworthiness, avoiding legal issues, and complying with the law. It is an essential responsibility of every taxpayer, and failure to comply with it can have severe consequences
