Filing Income Tax Returns (ITR) in India | When is the Best Time?

The best time to file your Income Tax Return (ITR) is usually as early as possible within the designated filing period. The typical timeline for filing ITRs is from April 1st to July 31st of each assessment year, for the previous financial year's income.

Filing early offers several advantages:
– Avoid Penalties: Late filings can result in penalties. Filing within the due date helps avoid these unnecessary charges.
– Time for Corrections: If you file early, there’s ample time to identify and rectify any mistakes in your return.
– Quicker Refunds: Filing early often results in receiving any potential tax refunds sooner.
– Less Stress: You avoid the last-minute rush and the associated stress when the deadline approaches.

Table of Contents

1. Introduction
2. Why Early Filing Might Be a Smart Move
3. Why One Should Wait Until Mid-June
4. Conclusion

1. Introduction

Income Tax Return (ITR) filing in India unfolds annually from 1^st April to 31^st July of the assessment year (31^st October in case of persons getting their book of accounts audited under Section 44AB of the Income-tax Act, 1961 and their partners while 30^th November for business requiring transfer pricing reports), offering taxpayers a four to seven months window to get their financial affairs in order. This timeline invariably sparks a crucial dilemma: Should taxpayers sprint to file their Income Tax Returns early, or is it better to bide their time until the final countdown? Let’s delve into the perks of early filing versus the merits of waiting and arm taxpayers with the insights to decide on the best time to file their ITR.

2. Why Early Filing Might Be a Smart Move

2.1 Quick Refunds

Imagine getting your tax refund before the summer’s over! One of the most enticing benefits of filing an ITR early is the prospect of speedy refunds. The sooner a taxpayer files, the quicker the income tax department can process his refund. Early filers are like the VIPs of the tax world—they often receive their refunds faster than those who join the eleventh-hour rush.

2.2 Ample Time for Documentation

Filing early is like setting out on a road trip with a meticulously planned itinerary. It allows time to collect all necessary documents, including pay slips, Form 16 and savings certificates. This proactive approach transforms the filing process into a smooth, stress-free journey. It also affords taxpayers plenty of time to resolve discrepancies or hunt down missing documents without the looming shadow of deadlines.

2.3 Avoid Last-Minute Hassles

As the deadline approaches, the income tax department’s digital highways become congested with last-minute filers, leading to delays and potential system slowdowns. Filing early is akin to taking a scenic route, free from traffic snarls, ensuring that one’s return is processed without a hitch.

3. Why One Should Wait Until Mid-June

3.1 Accurate TDS Information

Sometimes, patience pays off. Deductor typically issue TDS forms, such as Form 16 (for salary) and Form 16A (for other incomes), by June 15. Filing Income Tax Returns before these forms arrive can be like assembling a puzzle with missing pieces, leading to discrepancies and mismatches with the tax authorities’ records.

3.2 SFT Reporting

Indian income-tax laws require certain high-value transactions to be reported in a Statement of Financial Transactions (SFT). This includes hefty share trades, large cash deposits or withdrawals, and property purchases exceeding Rs. 30 lakh. The deadline for entities to submit these reports for the financial year 2023–24 (FY24) is May 31, 2024. Filing before these reports could leave critical details out of the loop.

3.3 Handling Income Changes

For those anticipating significant changes in their income or needing corrections in TDS entries, waiting until closer to the deadline can be a strategic move. This allows for adjustments before filing ITR, ensuring that the return is accurate and reflects the latest financial landscape.

If an individual’s entire income is already reported to the tax department, they might benefit from filing their ITR early. This is especially true for salaried employees with no additional income sources and whose TDS is already correctly reported in their Annual Information Statement (AIS).

4. Conclusion

As of June 27, 2024, a staggering one crore plus returns have already been filed for Assessment Year 2024-25, with 37% already processed by the Income Tax Department. What are taxpayers waiting for? Filing ITR now can expedite refunds and alleviate the stress of last-minute filing while waiting, which ensures all TDS details are spot-on. Taxpayers should evaluate their unique situations, gather all necessary documents, and, if needed, consult with a tax professional to determine the optimal time to file their ITR.

Disclaimer: This blog is intended for informational purposes only and does not constitute tax advice. Taxpayers are encouraged to consult a tax professional for specific advice tailored to their situations.