A loyal taxpayer has a duty to pay income tax and filing tax returns every year. It is an important task that every person has to follow. As it is important to file tax returns, some people tend to miss filling tax for some reasons.
Whatever may be the reason, if the deadline for filing tax is skipped, a person may have to face some penalties and consequences. The Income Tax departments are forced to file the penalties, which may affect the total tax liability of the particular taxpayer who missed to submit taxes on time.
What are those penalties that you may have to face if you missed out filing your tax filing and tax returns? Let us know about it.
- If the amount of tax as liability exceeds to Rs. 10,000 for a year, the same has to pay an advance tax that is counted to four installments for the year. Furthermore, if the taxpayer also fails to pay this penalty, the same will be required to pay a penal interest, which is stated, under three sections of I-t Act.
- The interest for the default to pay advanced tax payment increases from 1% per month to 5 % on the amount of due tax.
- If the interest payable for tax penalty is not paid before the due date, the charges could increase with the change of date of pay.
How to avoid it?
The avoidance to these three liabilities can be done by filing tax to the Government on the due time. Doing this, a person can save itself from paying the annoying additional interests plus, the person can get benefit from having back taxes.
Back Taxes—what it is?
The best solution to avoid improper tax payment is preparing tax statements throughout the year. There are tax preparation experts who can assist is making the statements that would yield favorable outcomes. The best result you can expect is back taxes. The main benefit of preparing timely tax statements is that the IRS officials can put you back to ‘no tax pay’ to a certain limit and you could stay out of tax audits.
Late Payment Penalty
The late payment penalties are subjected to pay 10% of the total tax amount which is payable. Not only this, the IRS officials can have an audit, which will result in paying tax amount with interest at the rate of 9.25 per annum.
How to avoid it?
IT department officials are quick at their actions of making penalties. So, make sure you make a calendar alert so that you may not tend to miss the payment deadlines in the financial month.
The first step of filing tax is to estimate the annual taxable income to pay to the Government. After knowing it, if the figures are reported in lower numbers, Income Tax Department can impose under-estimated penalties. This penalty can deduct your earned income.
How to Avoid it?
To avoid the under estimated penalties, make sure a person pays a full taxable amount according to the income earned. The income department may ask for details of estimation, so it would be good to keep proper records of tax amounts with all data.
In the end,
Paying taxes on time is important to help your Government imply it on developments of cities and states and even the country as well. Paying a small amount can lead to the growth of your land with providing all necessary facilities.