We are at the end of June and even before we will realise, the 31st July deadline for filing income tax return will be staring at us in the face, like it does every year. Rather than the last minute scramble, we suggest, this year, you file your income tax return as early as possible. And for doing this we will give you, not just one, but five reasons on why you should file income tax return early.
1) Faster processing of return
If you file your income tax return early, you can avoid the last minute rush. Also filing your income tax return early will make sure that your return is processed early. Once you are done with your filing of return, you will have one less thing to worry about and you can breathe easy and concentrate on your other tasks.
2) Faster refunds
Faster receipt of refunds is the icing on the cake. If your return is filed early and processed early, it will help you get your refund (if any) early. If the refund amount is a big amount, you can use it for some other productive purpose or repaying an existing loan (if any) or investing it somewhere. Don’t forget to mention your bank account details in the income tax return filing form, so that the refund amount can be transferred directly into your bank account.
3) Consulting a tax professional and getting documents in order
If you decide to file your income tax return early, you will have sufficient time to consult your tax professional on how to go about filing your return. You will also have sufficient time to get in place all the relevant documents like Form 16 (from your employer), Form 16A (from the bank), Form 26AS (from the Income Tax website) etc. If the Form 16 / Form 16A details don’t match with the Form 26A details, then you can get in touch with your employer / bank and ask them to take corrective action.
4) Interest on late payment of income tax
If your employer has deducted tax (TDS) lower than the actual amount then you have to pay the remaining amount of income tax before filing your return. Banks deduct TDS at the rate of 10% on your fixed deposits. But if you fall in the 20% or 30% income tax bracket then you have to pay the remaining income tax before filing your return. If the pending income tax amount is not paid by the due date, then interest has to be paid @ 1% per month on the amount due. So the sooner you pay the pending income tax amount and file return, the lower is the interest you will have to pay on the income tax amount due. Also if you decide to file return early and the amount of income tax to be paid is large, it gives you time to arrange for the amount to be paid.
5) Helps in loan applications
If you have applied for a home loan or any other loan, then along with your KYC documents, you have to submit financial document/s (salary slip / salary certificate from employer / bank statement / Form 16 / income tax return). So income tax return can be submitted as one of the financial document/s when applying for a loan. If you file return early and your return has been processed, the tax return document comes in handy for the financial institution to decide on the amount of loan to be sanctioned to you and also speeds up loan decision.
