Tax deadline: Who should file ITR early and not wait till May 31

Income Tax Return (ITR) filing for Financial Year 2023-24 (FY24) began early April. The Central Board of Direct Taxes said in a press statement that people file taxes early for convenience and getting seamless service. However, chartered accountants are asking taxpayers not to file ITR before June.

 

Their advice stems from the fact that banks and other entities will complete their Tax Deducted at Source (TDS) reporting on interest from fixed deposits and savings accounts by May 31. Likewise, employers typically begin issuing Form16 to employees early June.

 

 “The early release of ITR forms is a most welcome development; it allows for the live testing of forms and ironing out of issues before the rush close to filing deadlines,” said Pallav Pradyumn Narang, partner at chartered accountants firm CNK.

 

“However early filing of returns is not practicable for all assesses particularly those who have substantial TDS credits to be set off against their tax liabilities. This is because the due date for filing TDS returns for the fourth quarter is 31st of May and filing returns based on estimates can lead to tax demands along with interest on account of short payment of taxes. In such cases therefore it is best advised to wait for the TDS certificates and 26AS forms to be updated with tax credits before filing a return of income,” he said.

 

While filing taxes keep in mind that the Statement of Financial Transactions (SFT), which records significant transactions such as credit card activities, bond or stock transactions, mutual fund transactions, and cash deposits exceeding Rs 10,00,000  each, concludes on May 31.

 

‘Business Standard’ spoke to legal experts to know about the legalities of delayed tax filing. "Rule 31A (2) of the Income Tax Rules 1962 prescribes provisions relating to the last date for filing statement of tax deduction at source,” said S Vasudevan, executive partner at legal firm Lakshmikumaran and Sridharan.

 

“…Rule 31 of the IT Rules prescribes that the deductor of TDS is required to issue a certificate of tax deducted at source in Form 16 (majorly for salaries)/ 16A (for other cases apart from salaries). The due date for issuing the said certificate is 15th June of the next financial year (i.e., 15.06.2024),” said Vasudevan.

 

Note that the details of Tax Deducted at Source (TDS) deducted are reflected in Form 26AS only after the deductor (the entity deducting the tax) files its TDS return with the tax authorities. Until the deductor submits this return, the TDS details may not be visible in the taxpayer's Form 26AS.

 

Vasudevan said large companies typically file their TDS statements around the last date. “This even gets delayed to the first week of June. His advice for filing ITR in June must involve:

 

Reconcile income reported in ITR with income reported in Form 26AS and secondly ensure there is no underreporting of income.

 

Who should file ITR early

 

People who have had 1 per cent TDS deducted on property transactions, including the sale of a property at loss. Since TDS is already reported, they can file early to claim a refund on the excess TDS deducted.

 

People whose entire income is already reported to the tax department. Such individuals can use the information in their Annual Information Statement (AIS) to file returns and claim refunds early, without waiting for Form 16 from their employer.

 

Non-resident Indians who do not have any other source of income in India except for capital gains from the sale of property. Since their TDS return was already filed in the second quarter, they can file their returns early as the information is already reflected in their AIS and Form 26AS.

 

Filing taxes closer to the deadline allows individuals to assess their financial situation more accurately. By waiting until mid-June, taxpayers can ensure that all income sources and deductions are accounted for, potentially reducing the risk of errors that could lead to penalties.