As a common practice, the last date for filing your income tax return (ITR) is 31st July of every year. However, due to the Coronavirus pandemic, this year has been full of challenges that have impacted every individual and organization in the country. In light of this situation, the Income Tax Department has provided an extension for filing your ITR. The date has been revised for the 4th time now, with the latest date being 30th November 2020.
In this article, we will discuss what ITR filing is and how an extension on the ITR filing date impacts your money.
What is ITR?
ITR is the summation of your annual income from various sources, such as your salary, profits from business, income from property, and other capital gains. ITR also takes your tax liabilities into account, along with the taxes that have been paid by you and the refunds on taxes that you qualify for. ITR is treated as legal proof of your income and is eventually used by other financial institutions for financial transactions.
Why should you file your ITR?
As per the Income Tax Act, 1961, it is mandatory by law to file your ITR to disclose your annual income. Any individual under the age of 60 years with an annual income of more than ₹2.5 lakhs has to file their ITR. For individuals over the age of 60 years and under the age of 80 years, the limit is ₹3 lakhs. Lastly, for senior citizens over the age of 80 years, the annual income limit is ₹5 lakhs.
There are many hidden perks of filing your ITR on time. As an individual, you can apply for a tax refund if your tax liability is lower than the tax paid. ITR is also crucial if and when you apply for a loan. In the case of a company, ITR is required to apply for tenders and to receive investments.
How can you file your ITR?
Over the years, filing your ITR has become a simpler process. There are two ways that you can follow. The first is an offline submission, and the second is an online submission. If you opt for offline submission, you can download the e-files from the Income Tax Department’s website. After downloading the file, you can fill out all the details and calculate the tax. You can upload the ITR XML file, and upon verification, you can proceed to submit the ITR.
Online ITR filing, on the other hand, is a similar process that can be completed on the Income Tax e-Filing Portal itself. You can simply log-in, fill out the required details, verify your ITR filing, and submit the ITR online, on the website itself. This requires you to have your phone number linked to your Aadhar card for OTP verification.
What to do in case you miss the last date to file ITR?
Missing out on the ITR filing last date can reflect negatively in many cases. Having said that, if you have missed out on filing your ITR, you can still file it after the due date. This is called ‘belated return’. You can file your ITR any time before the end of the assessment year. However, as per the amendments in the Finance Act, 2017, belated returns carry a late fee. This fee can vary between ₹1000 to ₹10,000, depending on your income bracket and the delay in filing your ITR.
Due to the Coronavirus pandemic, the last date for filing the ITR for FY 2019-20 has been extended till 30th November 2020. This move was planned to provide relief to taxpayers and allow tax officials time to ensure compliance across all sectors. With the date approaching, it is time to start filing your return as soon as you can.