[ad_1]
Taxpayers are filing their income tax returns (ITRs) early for the Assessment Year 2024–25 (FY25). By April 29, over 5.92 lakh returns were filed, with over 5.38 lakh verified and 3.67 lakh processed. The early filing allows revisions without penalties. However, it also has many drawbacks.
Mid-June is the sweet spot
File ITRs from the second week of June onwards since most incomes, like salary, interest, and rent are now affected by tax deducted at source (TDS). “Data related to your ITR is reported by others too. So, wait till June’s first week to reconcile your figures with TDS data reported on your PAN,” says Akarsh Garg, partner, Triolegal Associates.
Wait for Form 26AS and AIS
TDS, filed by the payer with the payee’s permanent account number (PAN) by May 31, reflects in Form 26AS and the Annual Information Statement (AIS), for claiming in ITR. “If you file ITR before May 31, you may forget to claim TDS. If claimed but not updated in Form 26AS, TDS might be disallowed, inviting a demand notice from the Income-Tax (I-T) Department. Any transaction not reported in ITR also prompts departmental communication for clarification,” says Alay Razvi, partner at Accord Juris LLP.
Wait for SFT reporting
As mandated by income-tax laws, certain transactions must be reported by various entities to the I-T authorities in the Statement of Financial Transactions (SFT). Examples include share transactions, cash deposits in bank accounts, and property purchases. The deadline for reporting such transactions is also May 31, 2024, for the financial year 2023–24 (FY24).
Form 16: Crucial for filing ITR
Employers must give Form 16 to employees by June 15, detailing salary and TDS. Taxpayers should wait for Form 16 to file their ITR, as it’s crucial. Not doing so can lead to complications and potential scrutiny from the tax department, ultimately delaying the processing of your return and possibly resulting in penalties.
Filing your ITR after receiving Form 16 and ensuring TDS reconciliation reduces the need for revisions later, which can be time-consuming and may draw additional scrutiny from the tax authorities.
Even NRIs shouldn’t file early
Who should file in May
Salaried individuals with simple tax affairs: If you are a salaried individual with straightforward tax affairs, go ahead and file your ITR in May. “If you have only one source of income (a salary), limited deductions, and no other complex financial transactions, filing early can be advantageous. With a relatively uncomplicated tax situation, there’s less need for additional time to carry out tax planning or document reconciliation,” says Amit Bansal, partner, Singhania & Co.
Individuals expecting tax refunds: Filing your tax return early can speed up the processing of your refund if you’re expecting one. But even such individuals should think twice about filing early if they have multiple sources of income or complicated financial transactions.
Taxpayers travelling or relocating: If you’re planning to travel or move abroad close to the tax filing deadline, filing your tax return early can offer peace of mind and prevent last-minute hassles, especially if you won’t have access to documentation or tax professionals during that period, says Bansal.
In short, while filing your ITR before the due date (July 31) it is advisable to avoid last-minute rush and penalties, it’s equally crucial to wait until you have all the necessary documents, especially Form 16, to ensure accurate reporting of income and taxes.
· In addition to TDS and tax collected at source (TCS) details, AIS also shows interest, dividend, stock market transactions, mutual fund transactions, among others
· In case there are errors, it also accepts feedback from taxpayers on the information displayed in AIS
· AIS shows both reported value (value reported by the reporting entities) and modified value (i.e. the value after considering the taxpayer’s feedback) for each type of information, i.e. TDS, Statement of Financial Transaction (SFT) and various other information
· A summary of your tax-related information (TIS) is created from the AIS; it is then used to automatically fill in the relevant sections of your tax return form, making the tax filing easier
*Source: Cleartax.in
First Published: May 06 2024 | 7:39 PM IST
[ad_2]
Source link