The deadline to file income tax return for individuals has been pushed by another month to August 31 from July 31. But this shouldn’t make you complacent and wait for the last minute to file your income tax return, especially if you were liable to pay advance tax. If you do so, you may end up paying more tax. This is how :

Usually, advance tax is to be paid in four instalments by March 31 of the year in which you earn the income, if you estimate your tax liability after reducing TDS to be over Rs 10,000 for the year. If you didn’t pay the entire amount by March 31, and it’s less than 90 per cent of the advance tax due, then you are liable to pay interest on the outstanding tax amount from April 1, 2019 till the date of payment. If you thought of delaying your tax payment because the return filing date has been extended, you will have to pay more interest on the shortfall.

So, check if you have any additional income tax to be paid after accounting for advance tax payments made by you and tax deducted at source (TDS) by your employer or other entities.

The interest you have to pay on the shortfall in advance tax is at 1 per cent per month (12 per cent a year) of delay from April 1, 2019. There is no investment avenue available that will earn you 12 per cent, if you parked the unpaid tax amount for a month in a fixed income instrument.

Say, the income tax payable, after accounting for TDS and advance tax, is Rs 15,000, then you will have to pay an interest of 1 per cent per month (or 12 per cent a year) from April 1, 2019 till the time you pay the balance income tax. If you paid this balance Rs 15,000 in April, the amount of interest due would be Rs 150. If you pay it in May, the interest due would be Rs 300, Rs 450 if you pay in June, Rs 600 if you pay in July, and Rs 750 if you pay in August. Higher the amount of unpaid income tax, higher the interest.

Don’t wait for August 31st to pay the balance income tax and file your return as soon as possible.

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