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  1. ITR deadline extended but here’s why paying taxes before July 31 is still smart

ITR deadline extended but here’s why paying taxes before July 31 is still smart

ITR filing deadline extended: The government on Thursday extended the income tax return filing deadline for almost all individual taxpayers for the assessment year 2018-19 by a month to August 31.

By: | Updated: July 26, 2018 11:38 PM
ITR deadline extended but here's why paying taxes before July 31 is still smart CBDT has extended the due date for filing of the Income Tax Returns from July 31 to August 31

ITR filing deadline extended: The government on Thursday extended the income tax return filing deadline for almost all individual taxpayers for the assessment year 2018-19 by a month to August 31, but experts say that it would be wise to still pay taxes before July 31. The Central Board of Direct Taxes (CBDT) has extended the due date for filing of the Income Tax Returns from July 31 to August 31 for those taxpayers whose accounts are not liable for audit.

“Although the due date has been extended, those who have taxes to pay should pay before July 31 to save additional one month interest under section 234B,” Kuldip Kumar, Partner and Leader, Personal Tax, PwC, told FE Online. Interest under section 234B is when there is a default in the payment of advance tax.

Taxpayers except senior citizens have an obligation to pay taxes in advance where tax due net of TDS is more than Rs 10,000, taxpayers have an obligation to pay taxes in advance. In such cases, Where there is a shortfall of payment of taxes by March 31, by more than 10% of such taxes due, interest is levied at 1% under section 234B on such shortfall for the period beginning with April to the end of the month, in which such taxes are paid.

If a taxpayer was to file the tax return by July and had some taxes payable for which interest is payable under section 234B, interest would have been paid for four months i.e. April to July. Now the due date is extended, and if taxpayer decides to file the return in August and pay taxes then, interest would be payable for 5 months ( April to August). Taxpayers can save this one month interest if he or she pays the taxes by July 31, but file the return later in August, Kuldip Kumar explained. Senior citizens are exempted from the provision of advance tax.

The ITR deadline extension, however, brings a big relief for the taxpayers. “This extension was really necessary to give a last chance to the small taxpayers to opt the habit of timely filing of income-tax return. This is the first year of applicability of late filing fees and probably that is the reason for extending the due date,” Naveen Wadhwa, DGM, Taxmann.com said. The Income Tax Deapartment has said that a penalty up to Rs 5,000 can be levied on late-filers from this year onwards.

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