Business

Pay your tax liability soon, to reduce interest burden

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Even though the due date for filing income tax returns has been extended to December 31, taxpayers should note that they have to pay 1% of interest every month if their remaining tax liability exceeds ₹1 lakh and has not been paid by July 31.

The due date for filing the returns would normally be July 31, 2021. This was initially extended up to September 30 and has now been extended to December 31, 2021. The return pertains to the financial year 2020-21 and assessment year 2021-22.

“While filing tax returns, we calculate our tax liability. As per the provision of section 234A of the Income Tax Act, after deducting our prepaid taxes like advance tax, TDS etc if the remaining tax to be payable exceeds ₹1 lakh and is not paid by July 31 then it attracts an interest of 1% every month till the tax is paid,” Sujit Bangar, founder TaxBuddy.com, said.

So, with the tax return due date extended to December 31, if the tax liability exceeds ₹1 lakh, it will attract 1% interest each for the months of August, September, October, November and December, he added.

“Typically the salaried class, freelancers and professionals would be affected by this interest. In this situation, taxpayers should immediately compute their tax liability and pay the self assessment tax. They can file the returns later, for which time is available till December 31,” Mr. Bangar said.

Due to glitches in the Income Tax portal, some taxpayers still have difficulties in filing their returns immediately. However, they can remit their taxes now and file the returns at a later date, as time is available till December 31. Paying the taxes earlier will help reduce the interest burden even if the return is filed later, an official from All India Tax Payers Association said.


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Printable version | Oct 25, 2021 4:05:17 PM | https://www.thehindu.com/business/pay-your-tax-liability-soon-to-reduce-interest-burden/article36549141.ece

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