e-submitting of Income Tax Return 2019-20: People earn money at some point of the complete financial yr and spend it as in line with their requirement. However, sometimes they overlook to hold apart the tax quantity and use it on different expenses. In one of this situation, the taxpayer may find it hard to well-timed pay the tax while filing his/her Income Tax Returns. So, if you don’t have ok finances in hand to pay for the taxes, right here are a few options you could don’t forget. But earlier than that, let’s recognize…
What happens if you fail to pay earnings tax on time?
According to the Income Tax guidelines, in case you fail to file the ITR in the prescribed deadline (31 July of the respective evaluation yr), you may be vulnerable to pay a penalty as per the relevant fee. For taxpayers having an income much less than Rs 5 lakh, the maximum penalty is going as much as Rs 1,000. If your earnings are extra than Rs five lakh, you will be accountable for a penalty as much as Rs 5,000 if the return is filed after the due date however earlier than 31 December of the AY, and up to Rs 10,000 if the return is filed after 31 December of the applicable AY.
Likely situations whilst taxpayers fall quick of tax cash
There might be many motives because of which a taxpayer might fall brief of the tax money while submitting the returns. Some taxpayers mistakenly suppose that the complete earnings in the course of an economic year are their personal and forget about the tax legal responsibility that can be carried out on such profits — later they fall short of the tax cash.
Even if they’ve earmarked the tax money, at instances, they emerge as spending it on different matters, especially whilst tackling a monetary emergency.
Another not unusual situation is while taxpayers make a calculation mistake while assessing their tax legal responsibility and prepare hence – simplest to get a rude shock whilst submitting the returns after they realize that their earmarked funds are inadequate to repay their tax dues in overall.
So, the way to set up for finances to pay tax?
Before that, make sure which you’ve absolute clarity for your general tax liability for the applicable assessment yr. Don’t forget about to thing in income from other resources (like income/loss from house belongings, presumptive business or career, dividend earnings exceeding Rs. 10 lakh, agricultural income, and so on.), capital profits, and so on and so forth. Consult a chartered accountant if you get stuck.
Once you realize precisely how a lot you owe in taxes, the quality answer is to save that lots in your financial institution account or in a secure brief-time period investment instrument like a fixed deposit or routine deposit.
But in case you’re unable to set up for the tax money, here are some options that you could do not forget:
1. You can apply for a loan in opposition to your investments like shares, Public Provident Fund, FDs, existence insurance coverage, etc. Adding collateral will convey down the hobby element at the loan, especially when compared towards unsecured loans like a private loan. You can also raise finances quickly by taking a loan towards your gold.
2. If you don’t have any safety to pledge, you may keep in mind taking a personal mortgage (provided you have got a decent credit score) or a pre-authorised mortgage against your credit score card (furnished your card has that option). However, take into account both those loan facilities come with better hobby prices than a secured loan. So, make sure you cross for a mortgage handiest if you may come up with the money for to repay all the installments in time without jeopardizing other essential financial commitments to avoid debt accumulation and an impacted credit rating.
Three. You also can don’t forget liquidating sure investments like FDs and liquid finances to arrange for the tax money.
4. If you’re watching for the maturity of an investment or money from any other supply in a few weeks, you can want to pay off the taxes with your credit card before the closing date and pay off the cardboard bill with the help of the extra money in the hobby-free duration.
5. Lastly, you can search for assist from friends or own family to raise the fund or dig into your emergency fund. However, ensure you repay them in time or refill your emergency fund as soon as feasible.
Make a brief, informed choices to make sure you timely file your returns
There is the cost of missing out the due date for filing the ITR, and there may be the value of borrowing fund to pay the tax while you don’t have adequate money in hand. In many instances, the price of missing the ITR due date is better than the value of borrowing the fund to pay for the taxes. For instance, in case you want to hold ahead losses, you can leave out it if ITR isn’t filed on time.
So, intently evaluate your budget and make quick, informed decisions if the want is so you don’t miss out the tax filing due date. Remember, filling your returns is not only a formality. Your ITRs are very important when you practice for a loan or need to shop for a life insurance policy with an excessive sum confident – even to use for a visa to sure international locations. Paying your taxes in time will even ensure there are not any notices or inquiries from the I-T Department. As such, the financial field in well-timed fee of your taxes will go an extended manner to comfortable your financial future and minimize possibilities of any unpleasant surprises later.