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Economic Times
5 days ago
- Business
- Economic Times
Has the penal interest increased from 1% to 3% on advance tax payment in the new income tax bill 2025? Here's what CAs say
ET Online Advance tax Income Tax Bill, 2025 The Lok Sabha Select Committee recommended correcting a drafting error regarding how interest is calculated for shortfalls in advance tax payments. The revised Income Tax Bill 2025 that was introduced in the parliament yesterday (August 11, 2025) had a drafting error that stated:'the assessee shall be liable to pay simple interest at the rate of 1% for every month or part of a month, for the period….'. The select committee proposed that the penal interest for these shortfalls should be set at 3% for the first three installments and then drop to 1% for the final installment. So essentially there is no change to the advance tax shortfall interest law as outlined in the Income Tax Act, 1961 and New Income Tax Bill, 2025. What did the Lok Sabha Select Committee say in the corrigendum? As per the Lok Sabha Select Committee Corrigendum, this is what the select committee said:Page 447, for lines 18 to 42, —substitute—'425. (1)Where in any tax year, an assessee, liable to pay advance tax under section 404, other than the assessee mentioned in sub-section (3), has failed to pay such tax, or the advance tax paid by the assessee on its current income on or before the date specified in column B of the Table below, is less than advance tax due on returned income, as specified in column C, then the assessee shall be liable to pay interest on the amount of Shortfall of advance tax as specified in column D, at the rate of interest specified in column corrigendum Source: CORRIGENDUM What does this mean for taxpayers? ET Wealth Online reached out to CAs to clarify the meaning of this corrigendum, and here's what they said: Chartered Accountant Prakash Hegde, says: "Under section 234C of the Income Tax Act, 1961 , the taxpayer who delays the payment of Advance Tax due for the first three instalments (i.e. instalments which are due on 15th June, 15th September and 15th December) even by a single day, is required to pay interest for 3 months i.e. 3% of the amount of Advance Tax due for that instalment. The interest remains at 3% even if the Advance Tax due for an earlier instalment is paid on or before the next instalment. In the Income Tax (No. 2) Bill, 2025, in Clause 425, for the first three instalments it was mentioned that the 'interest shall be chargeable at 1% per month for 3 months, or the period of default, whichever is less' which means that a taxpayer would pay interest only for the period of default. This means that interest payable could be 1% or 2% or 3% depending on the date of actual would have helped the taxpayer to pay a lesser amount of interest if he pays early which was justifiable and equitable. However, now through the Corrigendum dated 11 August 2025, Clause 425 has been substituted to make the rate of interest exactly in line with the Act, i.e. regardless of the date of payment of the Advance Tax due for the first 3 instalments, if there has been any delay even by a day, the interest payable shall be 3%." Chartered Accountant (Dr.) Suresh Surana says: 'The corrigendum does not imply that the penal interest on advance tax has been tripled across all periods.' Surana explains: 'Under the original draft of the Income-tax Bill, 2025, the interest for shortfall in payment of advance tax was prescribed at 1% per month, similar to the provisions of section 234C of the current Income-tax Act, 1961. The corrigendum replaces this with a revised table, whereby for instance, the interest on shortfall in advance taxes for the first three installments, i.e., those due on 15th June, 15th September and 15th December, is levied at a flat rate of 3% for the respective period of shortfall in advance taxes. The interest on shortfall for the last instalment due on 15th March remains at 1%. It is important to note that the 3% is a one-time levy for the relevant instalment period and not a monthly rate. Surana says: 'Thus, while the original Bill prescribed a simple interest of 1% per month for each quarter on the shortfall in advance tax, the corrigendum consolidated this into a flat levy of 3% for the quarterly installments,which equates to the same overall interest cost for the respective relevant quarter. Accordingly, there is no substantive change in the effective interest burden; the amendment is primarily a change in the manner of computation and presentation.'Surana says: Clause 425 of the Bill (corresponding to Section 234C of the IT Act) provides for interest for deferment of advance tax. There are no changes in the interest rate under this clause. The provisions of the existing section have been textually simplified by providing a tabular format to calculate the interest for deferment of advance tax for easy understanding and simple calculation. The interest rate of 1% per month for a three-month period remains unchanged, but the revised format aims to simplify the process, improving clarity and ease of calculation. In essence, while the underlying interest rate and the basis for its calculation have not altered, the presentation has been simplified for better understanding. This approach retains the core principles of the IT Act, with a focus on ensuring compliance while providing taxpayers with a more user-friendly method of computing their obligations. Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP, says: Assume your total advance tax liability for the year is Rs 500,000. Under the law, you must pay 15% (Rs 75,000) by 15 June and 45% cumulatively (Rs 225,000) by 15 September. Suppose you pay only Rs 50,000 by 15 June. This results in a shortfall of Rs 25,000 for the June instalment. Interest is calculated at 1% per month for three months on the shortfall, i.e., Rs 25,000 × 1% × 3 months = Rs 750, with the three months running from 16 June to 15 15 September, your cumulative payment should have reached Rs 225,000, but you have paid only Rs 170,000. This again leaves a shortfall of Rs 55,000. Interest is again charged at 1% per month for three months on this shortfall, i.e., Rs 55,000 × 1% × 3 months = Rs 1,650, for the period 16 September to 15 December. In total, the interest payable for these two shortfalls is Rs 2, illustrates that the '3%' in the provision is simply 1% per month for three months for each instalment shortfall, exactly as under the old Income-tax Act, 1961. In summary, if there is a shortfall in remittance of advance tax even for a day beyond the statutory quarterly due date, interest is charged for a minimum of 3 months. Mihir Tanna, associate director, S.K Patodia LLP, says: In the Income Tax (no.2) Bill 2025 introduced in Lok Sabha, Section 425 specifies the provisions for interest liability in the case specified taxpayer failed to pay advance tax. To make it easy to understand, provisions of existing Sec 234C of Income Tax Act 1961 are simplified and presented in tabular form. Also the word "....Interest at the rate of one percent per month...." is presented as "3%" Interest payable on shortfall. Thus, it can be observed that there is no change in the provisions. Earlier also if the taxpayer doesn't pay advance tax on or before the specified due date, he/she was liable for interest for 1%*3 months. For example, a person has earned business income today on 12th August and didn't pay advance tax on the last due date (i.e. 15th June); in that case the taxpayer is liable for interest for the entire 3 months (i.e. July to Sep). If the taxpayer pay advance tax today on 12th August or any time before 15th Sep; taxpayer will not be liable for interest for 3 months (i.e. October to December). Further, relief is provided for income which can not be estimated in advance like capital gain, dividend etc. For such income, interest will not be applicable if advance tax is paid in the subsequent due date of advance. N.R. 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Mint
04-08-2025
- Business
- Mint
Step-by-step guide on reporting equity capital gains while filing income tax returns
In recent years, filing income tax returns (ITR) has become more streamlined, thanks to the income tax e-filing website that automatically fills in details related to salary and interest income. However, for taxpayers with capital gains, particularly from shares and equity mutual funds (MFs), the process remains complex and time-consuming. This is largely because capital gains reporting often requires scrip-wise disclosure and must be entered in multiple sections of the ITR form. The complexity is further compounded by the annual information statement (AIS), which often contains inaccurate information regarding equity transactions, making it necessary for taxpayers to verify and input the correct data manually. In this guide, Prakash Hegde, a chartered accountant and principal consultant for direct taxation at Acer Tax and Corporate Services Llp, offers a step-by-step explanation on how to correctly report capital gains from listed equity while filing your ITR. Equity capital gains must be reported in three key sections: ITR Schedule CG, Schedule 112A, and Schedule SI. Among these, Schedule 112A is the most important. Step 1: Schedule 112A This schedule is relevant for investors with long-term capital gains (LTCG) on equity. Taxpayers must pay close attention to specific dates when reporting these gains, as the reporting format depends on two critical bifurcations: 1. Whether the shares or mutual fund units were acquired before or after 31 January 2018, and 2. Whether the asset transfer occurred before or after 23 July 2024. For equity instruments bought before 31 January 2018 and sold in 2024–25, scrip-wise reporting is mandatory. In such cases, especially where mutual funds were acquired through systematic investment plans, each SIP installment must be individually reported. Taxpayers have to enter both the actual purchase price and the fair market value (FMV) as on 31 January 2018. Scrip-wise reporting is necessary for equity bought before 31 January 2018 because when the actual purchase price is higher than the FMV, the former will be considered as the cost of acquisition—potentially lowering taxable gains. For investments made after 1 February 2018, consolidated figures for purchase and sale values are to be reported instead of individual transactions. Another key detail is the change in the tax rate on LTCG: for assets transferred before 23 July 2024, the applicable rate was 10%, but for transfers made on or after 23 July, the rate is 12.5%. Therefore, it is critical for taxpayers to correctly select the date of transfer to ensure accurate tax computation and avoid discrepancies in their filings. Reporting in Schedule 112A can be done in two ways: manually entering each transaction or uploading a CSV (comma-separated values) file containing all the transaction details. If you have only a few transactions, especially if all your shares or mutual funds were purchased after 31 January 2018, manual entry is quicker and more convenient. Creating and uploading a CSV file is useful mainly when you have a large number of transactions to report, as converting the capital gains statement into the required CSV format is time-consuming and requires careful formatting. 1. Download the capital gains statement in Excel format from your broker, asset management company website, or agents like CAMS and KFintech. 2. Download the applicable ITR form (ITR-2 or ITR-3) from the income tax e-filing website. Along with the form, you'll receive two CSV templates. Open the one labeled 'CSV112A'. 3. This CSV file contains 15 columns, each requiring specific transaction details such as ISIN, company name, purchase and sale dates, quantity, and prices.4. Compare this format with your Excel statement and rearrange the columns in your Excel sheet to match the order in the CSV template. You'll also need to manually add missing fields and remove any extra columns not needed for the CSV. 5. Once the Excel is prepared in the same format as the CSV file, copy paste the data. 6. Once the CSV file is prepared, upload it in Section 112A while filing ITR. Step 2: Schedule CG In Schedule CG of the ITR, capital gains reporting is divided into three parts: 1. Part A(I) for Short-Term Capital Gains (STCG), 2. Part B(I) for LTCG, and 3. Part F for information on the accrual or receipt of capital gains. In the parts for STCG and LTCG, taxpayers are required to input the consolidated figures of the total gains made during the financial year. While the STCG section must be filled manually by the taxpayer, the LTCG section gets auto-populated based on the detailed transaction data already provided in Schedule 112A. Again, for STCG reporting, transactions made before and after 23 July 2024 must be declared separately because of the change in tax rates—from 15% to 20% after that date. Part F, on the other hand, is tricky. It requires a quarter-wise manual breakup of the capital gains realized during the year. The purpose of this quarterly reporting is to enable the calculation of interest on shortfall in advance tax payments under Section 234C. Because of this, accuracy is critical. The quarterly totals reported in Part F must align exactly with the total net gains disclosed in Schedule 112A and other parts of Schedule CG. If the numbers do not match, the system will throw a validation error. Step 3: Schedule SI Information under Schedule SI (Special Income) gets auto-populated based on the reporting done in the other two schedules. You just need to confirm the auto-populated information to finalise this schedule.
Mint
14-07-2025
- Business
- Mint
ITR filing: How to correctly report capital gains, CGAS withdrawal, buybacks
NEW DELHI : The income tax department has finally released the utilities for income tax return (ITR) forms 2 and 3, allowing individuals with capital gains, cryptocurrency investments, and business income to file their tax returns for 2024-25. Because of the delay in releasing these forms, the Central Board of Direct Taxes (CBDT) has extended the ITR filing deadline for the current assessment year from 31 July to 15 September. However, despite the extension, both taxpayers and tax professionals are facing significant difficulties due to the delay, said Prakash Hegde, a Bengaluru-based chartered accountant. Currently, only the offline Excel utilities for forms 2 and 3 are available, which means those who prefer filing their returns online will have to wait further. 'Many taxpayers, especially senior citizens and non-residents, are eager to file their returns to claim refunds. Tax professionals, meanwhile, are trying to shift focus to audit cases, whose deadline is 30 September, but are still catching up on pending ITR filings," Hegde noted. Even if you file ITR online, preparing your tax return based on the offline utilities would help. 'Taxpayers can download the latest utility and review the instructions for each schedule carefully to ensure they are well prepared," said Bhawna Kakkar, chartered accountant and founder, Kakkar & Co., Chartered Accountants. More disclosures Ashish Karundia of Ashish Karundia & Co. said the key changes are bifurcation of capital gains made before and after 23 July, capital loss on buyback transactions done after 1 October 2024, increase in the filing mandate of Schedule AL (assets and liabilities) to ₹1 crore, enhanced reporting of deductions such as house rent allowance, 80C, etc., and Schedule TDS (tax deducted at source) mapping with TDS sections. 'Unlike last fiscal, each TDS entry must include the section under which tax was deducted," said Karundia. The newly introduced TDS section code in Schedule TDS is prefilled in the latest ITR forms from details in Form 26AS and the annual information statement (AIS), said Alok Agrawal, partner, Deloitte India. 'However, taxpayers can manually edit the code from the options listed in the dropdown, if required. This requirement of quoting section code has been introduced to reduce mismatches and streamline the reconciliation process with Form 26AS and the AIS, for cases where the same payer has deducted tax under two different provisions of the law," he said. Kakkar pointed out that more details about home loans are also required to claim interest on them under Income from House Property. 'For instance, the sanction date is to be filled, which would require the sanction letter. But, the amount disbursed, and not sanctioned, is also to be disclosed, so you need the loan statement as well. Similarly, other details like balance as of 31 March and interest on loan too need a loan schedule and statement for accurate reporting." Apart from more disclosures, capital gains made before and after 23 July 2024 have to be reported separately. Reporting capital gains Equity assets sold on or before 23 July 2024 will be taxed at 20% for short-term capital gains (STCG) and 10% for long-term capital gains (LTCG). However, for those sold after this date, the LTCG rate is 12.5%. Kakkar said the ITR utility provides distinct sections or sub-schedules for these periods, ensuring accurate tax rate application on eligible capital gains. LTCGs from stocks and mutual funds are to be reported scrip-wise, but the information is not pre-filled in the forms this time either, so taxpayers will need to either manually fill in the data or upload a comma-separated values (CSV) file. 'At the time of advance tax calculations, we noticed that brokers are already giving statements classifying them into these two periods. So, reporting the transactions separately should not be a challenge," Kakkar said. STCGs on equity don't require scrip-wise details, and instead only the total sale amount and cost of acquisitionshould be mentioned. For property sales done after 23 July, sellers can choose between two methods to calculate LTCG tax: The new flat rate of 12.5%, without the benefit of indexation on the cost of acquisition, or the old rate of 20%with the indexation benefit. This gives sellers the flexibility to pick the option that results in a lower tax outgo. Most sellers would have already decided this while calculating advance tax, so reporting in the ITR form should be done accordingly. CGAS withdrawal after 23 July The requirement to split capital gains reporting also extends to unutilized amounts withdrawn from the Capital Gains Account Scheme (CGAS), where taxpayers temporarily park capital gains intended for reinvestment in property to claim benefits under Section 54 and Section 54F. In the updated ITR forms, a separate column has been introduced to indicate whether such withdrawals occurred before or after 23 July 2024. The forms have also clarified that funds withdrawn after 23 July will be taxed at the new 12.5% rate, though experts believe this may not be correct. Sonu Iyer, partner and national leader, people advisory services-tax, EY India, explained that the unutilized balance in the CGAS is deemed to be LTCG in the year in which the limitation period expires. 'Section 112(1)(a)(ii) says that LTCG should be taxed at 20% for any transfer that takes place before 23 July 2024 and 12.5% for any transfer that takes place on or after 23 July 2024. The date of transfer here should be construed as the date of transfer of the original property. Hence, the withdrawal from CGAS per se does not result in transfer," said Iyer. "So, the 12.5% tax rate applied by the excel utility appears to be a deviation from the technical position, as the tax rate should not be the date of withdrawal or expiry of the CGAS period and rather is based on the original date of transfer, which should make the tax rate 20% in this case," she added. Share buyback loss provision A new feature in Schedule CG of ITR-2 and 3 forms addresses the treatment of share buyback transactions. Following 1 October 2024, the tax responsibility for share buybacks by listed companies has shifted. Shareholders can now claim a capital loss on such buybacks, provided the income from the buyback is correctly reported as dividend income. 'In effect, the ITR form expects the sales consideration to be shown as nil in the capital gains schedule since the company already paid buyback tax and the equivalent amount to appear as taxable income elsewhere. This dual disclosure will activate the allowable loss," Kakkar explained. Earlier, individual taxpayers had no way to claim losses from share buybacks, as the entire tax treatment was handled at the company level. With the new rules, eligible taxpayers can now use these buyback-related losses to offset capital gains, which may help lower their overall tax liability. 'Taxpayers will need to be diligent in linking their buyback entries across schedules to avail the benefit correctly," Kakkar said.
Economic Times
28-05-2025
- Business
- Economic Times
Taxpayers should avoid filing ITR before June 15: Here's why
The income tax department recently notified the income tax return (ITR) forms to be used for filing tax returns for FY 2024-25 (AY 2025-26). However, unlike previous years, when the ITR forms were notified well in advance, this year they were notified by the end of April 2025. Further, the income tax department has yet to release the utilities, i.e. the online software/forms necessary for filing ITRs. Tax experts advise postponing the filing of ITRs until June 15, 2025, even though the ITR forms are available now. ET Wealth online explains why it is advisable to defer filing your ITR till after June 15 and the problems you can face if you file it before. Also Read: 9 changes in ITR forms for FY 2024-25 (AY 2025-26) As per income tax rules, taxpayers should get their TDS certificates, such as Form 16 or Form 16A, latest by June 15. Chartered Accountant Prakash Hegde says, "When the taxpayer has earned any income in the last quarter of FY 2024-25 (January 1-March 31, 2025) that is subject to TDS, the payer of that income has time until May 31, 2025, to file the eTDS return with the income tax authorities. The eTDS return captures the details of the income paid to the taxpayer and tax deducted on it." The payer of income might be the taxpayer's employer (i.e., for salary), bank (i.e., for interest on deposit), company in which the taxpayer holds the shares (i.e., for dividends), buyer of property in the case of a non-resident (i.e. for capital gains), tenant of a non-resident (i.e., for rent), customer/client of a contractor/professional (i.e., for contract payments/professional fees), etc. Hegde says, "Once the eTDS return is filed, it may take up to 3-4 days for the same to get processed and reflected in Form No. 26AS of the taxpayer. If the payer of income files the eTDS return on May 31, the details of income and TDS could be available in Form No. 26AS of the taxpayer by the end of the first week of June. Further, the payer of the income is required to issue a TDS Certificate in Form No. 16 (annual certificate for salary) or Form No. 16A (quarterly certificate for other income) to the taxpayer by June 15. These certificates show the exact details of the income and the TDS deducted and paid by the payer of the income."If taxpayers have these TDS certificates, ITR filing becomes easier. Due to technological advancements, the information from the TDS certificates is auto-populated in the ITR forms. A taxpayer can cross-check the information in TDS certificates, ITR forms, and the Annual Information Statement (AIS) to ensure that the correct information is given to the income tax department while filing the ITR. Also Read: Can you claim LTA tax exemption in new tax regime? Hegde says, "As per the changes made in the income tax law in recent years, even where TDS is not deducted, the reporting entities (e.g., banks, companies, mutual funds, etc.) are required to report several kinds of financial transactions called Specified Financial Transactions (SFT) to the income tax authorities by filing an Annual Information Return. The reporting of financial transactions by reporting entities is subject to a certain threshold. Examples of such transactions are cash transactions, fixed deposits, credit card payments, purchase of bonds/debentures, investment in company shares, etc. All this information pertaining to a financial year must be reported by the concerned entities by May 31 of each year. Thereafter, the data gets processed in a few days (which may vary between 5 and 10 days) and gets reflected in the taxpayer's Annual Information Statement (AIS). The final version of the AIS will likely be available in the income tax portal by the second week of June." Tarun Kumar Madaan, a practising Chartered Accountant, says, "Once the income tax department enables the ITR utilities, early versions of the filing utility often experience technical glitches, which may cause calculation errors, system failures, or data validation issues. Allowing a buffer of a few days gives the system time to stabilise, ensuring smoother filing." Hegde says, "If a taxpayer rushes to file his ITR before Form No. 26AS, Form No. 16/16A, and AIS are available to him, there is a possibility of reporting incorrect details of income and TDS. This is because he may miss some critical information relevant to filing his ITR. If he misses such information and files the ITR, he must file a revised return, allowed until December 31 to provide correct information to the tax department. Hence, it is advisable to wait till June 15 for filing ITR." Madaan says, "Mismatch in AIS, or Form 26AS or non-reporting of TDS, even if done unintentionally, can result in tax notices or scrutiny assessments, delayed refunds or denial of legitimate TDS and even the requirement to file a revised return." He further adds, "When the income tax return is processed by the Centralised Processing Centre (CPC), TDS credit is allowed only for entries appearing in Form 26AS. If TDS has been deducted but not yet reflected in 26AS, the credit will be denied initially, which could affect your refund or result in a tax demand being raised. While a correction can be made later through rectification or revised returns, it delays resolution and complicates compliance." Conclusion While the Income Tax Act does not restrict early filing, for most salaried individuals and small taxpayers, filing after June 15 ensures complete and reconciled tax credit data and a lower risk of compliance issues or mismatched says, "Unless your ITR is urgently required for purposes such as loan approval or visa purposes, it is prudent to wait till June 15 to have all the required information to file ITR. In tax compliance, accuracy is far more valuable than speed provided the ITR is filed before the due date. A few extra days of patience can prevent future complications, safeguard your refunds (if eligible), and ensure that your ITR is filed right the first time."
Time of India
27-05-2025
- Business
- Time of India
Taxpayers should avoid filing ITR before June 15: Here's why
The income tax department recently notified the income tax return (ITR) forms to be used for filing tax returns for FY 2024-25 (AY 2025-26). However, unlike previous years, when the ITR forms were notified well in advance, this year they were notified by the end of April 2025. Further, the income tax department has yet to release the utilities, i.e. the online software/forms necessary for filing ITRs. Tax experts advise postponing the filing of ITRs until June 15, 2025, even though the ITR forms are available now. ET Wealth online explains why it is advisable to defer filing your ITR till after June 15 and the problems you can face if you file it before. Also Read: 9 changes in ITR forms for FY 2024-25 (AY 2025-26) TDS Certificates such as Form 16, Form 16A are issued latest by June 15 As per income tax rules, taxpayers should get their TDS certificates, such as Form 16 or Form 16A, latest by June 15. Chartered Accountant Prakash Hegde says, "When the taxpayer has earned any income in the last quarter of FY 2024-25 (January 1-March 31, 2025) that is subject to TDS, the payer of that income has time until May 31, 2025, to file the eTDS return with the income tax authorities. The eTDS return captures the details of the income paid to the taxpayer and tax deducted on it." Live Events The payer of income might be the taxpayer's employer (i.e., for salary), bank (i.e., for interest on deposit), company in which the taxpayer holds the shares (i.e., for dividends), buyer of property in the case of a non-resident (i.e. for capital gains), tenant of a non-resident (i.e., for rent), customer/client of a contractor/professional (i.e., for contract payments/professional fees), etc. Hegde says, "Once the eTDS return is filed, it may take up to 3-4 days for the same to get processed and reflected in Form No. 26AS of the taxpayer. If the payer of income files the eTDS return on May 31, the details of income and TDS could be available in Form No. 26AS of the taxpayer by the end of the first week of June. Further, the payer of the income is required to issue a TDS Certificate in Form No. 16 (annual certificate for salary) or Form No. 16A (quarterly certificate for other income) to the taxpayer by June 15. These certificates show the exact details of the income and the TDS deducted and paid by the payer of the income." If taxpayers have these TDS certificates, ITR filing becomes easier. Due to technological advancements, the information from the TDS certificates is auto-populated in the ITR forms. A taxpayer can cross-check the information in TDS certificates, ITR forms, and the Annual Information Statement ( AIS ) to ensure that the correct information is given to the income tax department while filing the ITR. Also Read: Can you claim LTA tax exemption in new tax regime? SFT is updated by second week of June Hegde says, "As per the changes made in the income tax law in recent years, even where TDS is not deducted, the reporting entities (e.g., banks, companies, mutual funds, etc.) are required to report several kinds of financial transactions called Specified Financial Transactions (SFT) to the income tax authorities by filing an Annual Information Return. The reporting of financial transactions by reporting entities is subject to a certain threshold. Examples of such transactions are cash transactions, fixed deposits, credit card payments, purchase of bonds/debentures, investment in company shares, etc. All this information pertaining to a financial year must be reported by the concerned entities by May 31 of each year. Thereafter, the data gets processed in a few days (which may vary between 5 and 10 days) and gets reflected in the taxpayer's Annual Information Statement (AIS). The final version of the AIS will likely be available in the income tax portal by the second week of June." Glitches in early ITR forms Tarun Kumar Madaan, a practising Chartered Accountant, says, "Once the income tax department enables the ITR utilities, early versions of the filing utility often experience technical glitches, which may cause calculation errors, system failures, or data validation issues. Allowing a buffer of a few days gives the system time to stabilise, ensuring smoother filing." Problems you can face if you file ITR before June 15 Hegde says, "If a taxpayer rushes to file his ITR before Form No. 26AS, Form No. 16/16A, and AIS are available to him, there is a possibility of reporting incorrect details of income and TDS. This is because he may miss some critical information relevant to filing his ITR. If he misses such information and files the ITR, he must file a revised return, allowed until December 31 to provide correct information to the tax department. Hence, it is advisable to wait till June 15 for filing ITR." Madaan says, " Mismatch in AIS , or Form 26AS or non-reporting of TDS, even if done unintentionally, can result in tax notices or scrutiny assessments, delayed refunds or denial of legitimate TDS and even the requirement to file a revised return." He further adds, "When the income tax return is processed by the Centralised Processing Centre (CPC), TDS credit is allowed only for entries appearing in Form 26AS. If TDS has been deducted but not yet reflected in 26AS, the credit will be denied initially, which could affect your refund or result in a tax demand being raised. While a correction can be made later through rectification or revised returns, it delays resolution and complicates compliance." Conclusion While the Income Tax Act does not restrict early filing, for most salaried individuals and small taxpayers, filing after June 15 ensures complete and reconciled tax credit data and a lower risk of compliance issues or mismatched reporting. Madaan says, "Unless your ITR is urgently required for purposes such as loan approval or visa purposes, it is prudent to wait till June 15 to have all the required information to file ITR. In tax compliance, accuracy is far more valuable than speed provided the ITR is filed before the due date. A few extra days of patience can prevent future complications, safeguard your refunds (if eligible), and ensure that your ITR is filed right the first time."
