‘The due date for your tax filing is here. Have you submitted your return?’ or ‘Hey Sonal, it’s time to file your ITR for this year!’

You may have received some version of these messages in your emails or from the innumerable finance apps in your phone all these years. But have you ever wondered why you need to file your ITRs on time, in the first place?

Here are 4 key benefits of filing your tax returns on time.


1. You will not have to pay penalty and interest

If you file your ITR past the due date (which is usually July 31 of the assessment year), or if you do not file your ITR at all, you will have to pay penalties and interest as per the Income Tax Act, 1961. The penalty for late filing of ITR can go up to ₹5,000.

In addition to this, you may also have to pay additional interest under section 234A. If you file your returns after the due date and have any outstanding tax liabilities, you will incur interest at the rate of 1% per month or part of a month on the tax amount due.

For instance, say you have a tax liability of ₹50,000 and you file your ITR six months after the due date. In this case, interest u/s 234A will be calculated as follows:

Interest amount:

= ₹50,000 x 1% x 6 months

= ₹3,000

The bottom line is that filing your ITRs on time helps you steer clear of above penalties and interest expenses.


2. You can carry forward and set off some losses

Delayed ITR filing doesn’t just lead to penalties and extra interest, it also prevents you from claiming some benefits like carry forward and set off of losses.

As per this provision, you can carry forward some losses (like long-term capital loss and short-term capital loss), and set them off against specific gains in the next few assessment years as prescribed. But non-filing or delayed filing of ITR robs you of this benefit. The losses are allowed to carry forward only when you file your ITR within due date.


3. You can claim your tax refund

Another benefit that you gain by filing your returns on time is that you can claim any tax refund you may be eligible for. For example, your employer may have deducted more TDS than necessary for your income, or you may have paid more advance tax than necessary.

At the time of ITR filing, you can submit a request to the IT department to refund the excess tax paid. The Income Tax department verifies the ITR filed by you and grant refund. However, this is not possible if you have not filed your income tax return. .


4. Loan processing and visa applications get easier

If you’re planning to travel abroad for a vacation, or if you intend to get a job in a different country, you will have to get an appropriate visa. Depending on the country you’re heading to, you may have to submit your ITRs for verification. Needless to say, if you have not paid your taxes and filed your returns, it could mean trouble for you.

Similarly, ITRs can also act as income proofs when you apply for a loan or a credit facility. If your bank asks to see your ITRs, and if you don’t have them because of non-payment of taxes, your loan/credit facility application could be declined.



These are the key benefits of filing your income tax returns within the due date. Remember that before you file your tax returns, you need to pay all your tax liabilities. This includes advance tax and self-assessment tax, as well as any interest due for late payment or non-payment of taxes. If you are liable to pay any taxes make sure you pay it on time to avoid interest/penalty.

To make tax payment easier, Kotak has launched a user-friendly payment gateway through which you can pay your taxes conveniently from your home or your office. The service is available for both Kotak customers and customers of other banks.


Latest Comments

Leave a Comment

200 Characters

Related Information

Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.