Income-tax filing: Should you file your returns in April or wait until July 31?

How soon should you file your income tax return?

The income tax (I-T) department has enabled all utilities and notified all forms needed to file income tax returns online in April.

Typically, this exercise is not completed right at the beginning of the financial year, but later. However, this does not mean income taxpayers can start completing their yearly obligation right away. At least not all of them.

Salaried, FD investors must wait

Most salaried taxpayers will not be able to file their returns now. This is because TDS payments – by employers (for tax deducted at source on salaries) and banks (for TDS on fixed deposit interest) – will be done by April 30.

“These entities will be able to start issuing Forms 16 and TDS certificates only after May 31 and that is when salaried individuals and those earning fixed deposit interest can commence the filing process,” said Chetan Chandak, director of TaxBirbal, a tax consultancy firm.

Form 16 is a certificate of TDS on salary given by employers to employees.

What if an individual has meticulously computed and maintained all TDS details? “You need to be extremely financially savvy to do so. Yet, my advice is that you should wait and go by Form 16 figures. This is because any discrepancy could trigger a query on mismatch in details from the tax authorities, which is best avoided,” said Nitesh Buddhadev, founder of Nimit Consultancy, a chartered accountancy firm.

“Also, until your deductor entity files TDS returns, the income tax department will not process your returns,” added Chandak.

Option available to a few

Only a very limited number of taxpayer categories can file returns in April.

Among them are NRIs who do not have any other source of income in India except, say, capital gains from the sale of property.

Let’s say her TDS return was filed in the second quarter of financial year 2023-24 (assessment year 2024-25). It would already reflect in the annual information statement (AIS) and Form 26AS and no further information is needed.

"In such cases, the individual can benefit by filing returns in April as it will be processed sooner and she will receive her money, that is, refund of any excess tax deducted, early,” said Chandak.

The same is the case for Indian citizens with property transactions that entail TDS of 1 percent.

“Suppose she sold a property for Rs 2 crore, the applicable TDS will be Rs 2 lakh. Let’s say this was sold at a loss and she has no other source of income. Therefore, she is entitled to a tax refund on the TDS withheld,” Chandak said.

Last year, form ITR-2, the relevant form if you have capital gains, had not been issued in April.

“But this year, the tax department has already notified forms and enabled utilities in April. So, such individuals can immediately file returns and get their money back sooner,” he added.

Likewise, a foreign citizen who has worked in India briefly can benefit from completing the exercise ahead of time.

“Suppose she was in India only for six months and her employer is yet to issue Form 16 to her. However, by now her income and TDS are already reported to I-T and would reflect in the AIS. She can use the information to file her returns and claim refund of any excess tax deducted,” said Chandak.

Also read: Filing ITR for 2022-23: Salaried taxpayer? Know how to choose between forms ITR-1 and ITR-2

File early for quicker processing, refunds

While you need not rush to file returns in April, ensure that you do it as soon as you can to avoid technical glitches and heavy traffic closer to July 31. The earlier your return is processed, the sooner will your money – in the form of tax refund claimed – get unblocked for use.

“But for anyone whose TDS has been withheld in last quarter of 2023-2024, the exercise will start only after May 31. This is the deadline for deductors to file TDS returns. They might take another two weeks to 15 days to issue TDS certificate or Form-16 to you. So, at your end, you should look at commencing the process of filing returns after June 15,” says Mayank Mohanka, Founder, TaxAaraam.com and  Partner, SM Mohanka and Associates.