Submitting the Revenue Tax Return (ITR) on time is a crucial accountability for each citizen. The taxes you pay assist the federal government develop the nation by enhancing and sustaining important infrastructure and public companies and making residents’ lives simpler. Submitting your tax return is helpful for varied causes, however not submitting can result in severe penalties.
So why is it vital to file ITRs? What are the results of not doing so? And what’s the final date for submitting ITR for Evaluation Yr 2024/25? Let’s discover out!
Why is it Obligatory to File ITRs?
It’s vital to file ITR as a result of:
- You’re legally obligated to – In case your gross annual revenue exceeds the fundamental exemption restrict, you will need to file an ITR beneath the Revenue Tax Act, 1961.
- You may be penalised – Chances are you’ll be questioning, “What occurs if I don’t file ITR?” In that case, you’ll be able to open your self as much as a sequence of authorized penalties. The Revenue Tax Division will impose fines and likewise cost curiosity on the quantity due. They might additionally offer you notices and take authorized motion.
- ITRs enable you to declare refunds – When tax is deducted at supply, the one approach to recuperate the surplus quantity you’ve paid is by submitting your ITR.
- ITR can confirm your revenue – Salaried people have wage slips for revenue verification, however for self-employed people and freelancers ITRs can act as an official revenue assertion.
- Overseas/Excessive-value transactions – Beneath Part 281 of the Revenue Tax Act, involvement in high-value or international transactions similar to asset transfers requires you to have a tax clearance certificates or ITR.
- Visa and loans – If you’re making use of for a visa, you’re required to submit the ITRs of the earlier three years. Equally, an ITR can complement your mortgage software by showcasing your revenue stability and monetary credibility to banks.
- Carry ahead losses – If your corporation or funding incurred a loss in a given yr, you’ll be able to carry the loss ahead to the following yr to cut back your taxable revenue.
However is it obligatory to file itr? Nicely, submitting your ITR is barely obligatory in case your gross revenue exceeds the fundamental exemption restrict. Beneath the previous tax regime, the fundamental exemption restrict is Rs 2.5 lakh for people under 60, Rs. 3 lakh for people between 60 to 80 years (senior residents), and Rs. 5 lakh for people above 80 (tremendous senior residents). The fundamental exemption threshold beneath the brand new tax regime, nonetheless, is Rs 3 lakh no matter age.
Additionally Learn: What’s Tax Planning – Aims, Sorts and Course of
What Occurs if You Don’t File ITR?
If you’re asking your self, “what occurs if i don’t file itr?” following are some penalties:
Penalties
One of many largest penalties of not submitting an ITR is penalties. In accordance with the Revenue Tax Act, one may be penalised in a variety of methods:
- In accordance with Part 234F, failure to file an ITR earlier than the deadline can lead to a late price of Rs. 5,000.
- In case your annual revenue is lower than Rs. 5 lakh, nonetheless, the late price is Rs. 1,000.
- Beneath Part 234A, one can also be required to pay an curiosity on the quantity of tax payable. An curiosity of 1% per 30 days is charged from the due date of submitting the ITR till the ITR is definitely filed. For instance, in case you owe Rs. 80,000 taxes in a selected monetary yr, and file your taxes 6 months late, the curiosity payable can be Rs. 4,800 (1% of Rs. 80,000 per 30 days for six months). So the longer you delay submitting your ITR, the upper the penalty will develop.
- As per Part 271H, you might have to pay a nice between Rs. 10,000 to Rs. 1 lakh in case you fail to file your TDS (Tax Deducted at Supply) or TCS (Tax Collected at Supply) returns on time. And a every day penalty of Rs. 200 per day may additionally be levied until you file your ITR.
Prosecution
The penalty for not submitting itr in any respect may be extreme and even result in prosecution. If a person’s tax legal responsibility exceeds Rs. 25,000, they should pay a nice and may be imprisoned for no less than six months as much as 7 years. If the tax legal responsibility is lower than Rs. 25,000, the person faces imprisonment of three months as much as 2 years together with a nice.
No Tax Refunds
In case you’ve paid extra taxes than you owe, you’re eligible for tax refunds. Nonetheless, you’ll be able to solely get these refunds if you file an ITR.
Can’t Carry Ahead Any Losses
If your corporation or funding incurs losses in a monetary yr, you should use these losses to offset in opposition to some other revenue you might have throughout that yr, and thus cut back your total tax legal responsibility. On prime of that, you’ll be able to carry ahead these losses to future years and set them off in opposition to these income, which is able to cut back your tax liabilities in these future years.
Right here’s a situation – Suppose Raheem owns a enterprise which makes a internet loss within the monetary yr. He wonders, ”what if i don’t file itr this yr?” If Raheem decides to not file his ITR, he’ll face some issues. The primary consequence is that he’ll forfeit the chance to hold ahead these losses to offset future income, which may cut back his tax legal responsibility in future years when his enterprise makes a revenue. Secondly, he additionally dangers penalties and curiosity expenses from the Revenue Tax Division.
Makes You Ineligible For Loans And Visas
Earlier years’ ITRs are important paperwork if you find yourself making use of for visas and loans as a result of they present your monetary historical past and revenue stability. In case you don’t file your ITR, your purposes may be rejected.
Additionally Learn: Who’s Required to File Revenue Tax Return And Why?
What’s the Final Date of Submitting ITR?
The final date of submitting with none late price for Monetary Yr 2023/24 (Evaluation Yr 2024/25) is July thirty first 2024 in case you don’t have an audit case. This date is relevant for taxpayers within the particular person, Hindu Undivided Household (HUF), Affiliation of Individuals (AOP), Physique of People (BoI), and many others classes. Here’s a checklist of deadlines for different classes:
- For companies requiring audit – thirty first October 2024
- For companies not requiring audit – thirty first July 2024
- Revised Return – thirty first December 2024
- Belated/Late Return – thirty first December 2024
It’s a good suggestion to take recommendation from knowledgeable when submitting your ITR. A tax advisor may help you file your taxes precisely and on time, so you’ll be able to keep away from any fines or penalties. Advisors may also enable you to save as a lot of your hard-earned cash as attainable, and even make a personalised plan that may will let you maximise your tax financial savings sooner or later. They’ll suggest tax-saving investments which can be aligned together with your monetary targets, scenario, and threat tolerance, which is not going to solely will let you take most benefit of tax deductions and exemptions however can even deliver you nearer to realising your monetary goals.
Get in contact with a professional tax advisor right this moment!