YOU CAN FILE ITR NOW — BUT PERHAPS YOU SHOULD WAIT. HERE’S WHY

AROUND 23,000 taxpayers filed their income tax returns ( ITR) in the first three days of Assessment Year ( AY) 2024- 25 ( FY2324) after the Income- tax Department for the first time opened return filing utilities on its portal from the first day of the assessment year, that is, April 1, 2024.

Last year ( for AY 23- 24 or FY 22- 23), even though the returns had been notified early, they became available for filing on the IT portal only in May.

Filing functionalities were available from May 20, 2023 for salaried individuals ( ITR- 1) and individuals, HUFS, and partnership firms generating an income from a business or profession ( ITR- 4). The filing utility for individuals and HUFS having income other than income from profits and gains from business or profession was available from May 30 ( ITR- 2).

For this year, who can now file ITRS?

The I- T Department, which functions under the Central Board of Direct Taxes ( CBDT), has operationalised the filing functionalities for some. Returns can be filed on the department’s website. “The ITR functionalities i. e. ITR- 1, ITR- 2 and ITR- 4, commonly used by taxpayers, are available on the e- filing portal from 1st April, 2024 onwards... Companies will also be able to file their ITRS through ITR- 6 from April 1 onwards,” the Department said in a statement on Thursday. The facility to file ITRS 3, 5, and 7 will be made available shortly.

The Department said this is for the first time in recent years that taxpayers are able to file their returns on the first day of the new financial year. “This is another giant step towards ease of compliance and seamless taxpayer services,” it said.

Should you file returns immediately?

According to tax department data, as of April 3, 22,599 returns had been filed for AY2024- 25. Of these, 20,868 returns have been verified for AY2024- 25, and 2,907 verified ITRS have been processed.

However, tax experts pointed out that the Annual Information Statement ( AIS) and Form 26AS are not updated until March 31, 2024, the last day of the last financial year. They said it may be better to wait for the AIS and Form 26AS to be generated before finalising tax returns to avoid discrepancies in filings later.

What are the AIS and Form 26AS?

The Annual Information Statement is a summary of a taxpayer’s financial transactions given in Form 26AS, which contains details of all Tax Deducted or Collected at Source ( TDS/ TCS) along with other details regarding interest, dividend, and stock market and mutual fund transactions.

While filing the income tax return, the detailed summary through AIS and Form 26AS is available to the taxpayer, who can either accept it as correct, or point out discrepancies, if any.

But why is this information delayed?

Since AIS includes details of financial transactions from reporting entities, the information will be available only after it gets updated from reporting entities such as banks and financial institutions. Similarly, Form 26AS gets updated after the income tax department processes the TDS returns.

Since the last date for filing TDS returns for the January- March quarter is May 31, the updated information is available only in the first week of June. This is the reason experts have flagged that filing returns without verifying AIS/ Form 26AS may result in errors, and lead to notices for incorrect reporting of income.

File Almost 3,000 ITRS have already been processed.