‘Better late than sorry’: Rushing to file ITR before June 15 may turn costly; experts explain why

Filing your income tax return (ITR) early may sound like efficiency, but doing it before June 15 may not be desirable, especially for salaried individuals. One of the main reasons to wait is for an updated Form 26AS and Annual Information Statement (AIS). These documents, which capture your income details, tax deducted at source (TDS), and high-value financial transactions, are often updated by mid-June. Filing your return too early could mean missing some of these details, increasing the risk of errors or notices from the tax department.

Gaurav Jain, partner-direct tax, Forvis Mazars, says, "While the Income Tax Act permits early submission of income tax returns, it is prudent from a compliance and reconciliation standpoint to defer filing until after June 15. This timeline aligns with the statutory deadlines for the issuance of critical documentation, such as Form 16 and Form 16A, which comprehensively outline the taxpayer’s earnings and TDS for the relevant financial year. Additionally, the e-TDS returns, which underlie these certificates, are due for submission by May 31 and may require a processing window of 3-4 days to reflect accurately in the taxpayer’s Form 26AS."

"Simultaneously, AIS incorporating Specified Financial Transactions (SFT) is typically updated by the second week of June. Filing prematurely may precipitate discrepancies between the taxpayer’s records and the information available to the tax authorities, potentially resulting in delayed refunds, TDS credit denials, or issuance of notices," added Jain.

For salaried people, it is essential to note that employers also take time to finalise and upload Form 16, a crucial document for taxpayers. If you file before receiving it, you may enter incorrect salary or TDS data.

Additionally, banks and mutual funds submit their reports around this time. Filing early may mean your return will not reflect capital gains, interest income, or dividend details accurately.

"Moreover, the ITR utility systems, in their nascent iterations, may exhibit technical inconsistencies that could further compromise the integrity of the return. While exigent circumstances may necessitate early filing- for instance, to satisfy loan or visa prerequisites—it is generally advisable to await the full reconciliation of all pertinent data before proceeding. Precision in tax reporting is paramount, and a deferment of a few days can significantly mitigate risks of non-compliance and administrative complications," says Jain.

Hence, experts suggest that instead of rushing, it’s wiser to wait until at least mid-June. This ensures all data is available and accurate, helping you avoid mismatches and potential penalties. While being an early filer is good, being an accurate one is better.