What happens when we file our taxes late? Will there be a fine? Will it affect our credit score or CIBIL record or in any such ways?
If you have paid all your taxes and filing is delayed, typically there is no penalty. For example, most of the employees pay taxes in the form of TDS (tax deducted at source). So even before you get your salary, Government gets its taxes.
There is absolutely no penalty if you file income tax late. You have time to file till the end of this financial year. However, it is good habit to file income tax on time as this is a very important document for banks and financial institutions when you deal with them.
Income tax is very different from credit score and CIBIL. CIBIL takes care of credit score of borrowers. It maintains the records of borrowers and credit card holders about their loans and repayments. A healthy borrowing and timely payment raises your credit score which means it will be easier for you to borrow from banks. Hence filing income tax late will not impact your credit score with CIBIL.
If you don’t file your income tax return and pay up, the interest will keep adding up until you do, not to mention a penalty that might be imposed on you. That’s good money you could be spending on yourself! However, there is no late filing penalty if a refund is due, but be sure to lose the interest on the refund amount. Secondly, late filing doesn’t allow you to revise your returns if you happen to spot and error.
Filing your return late is better than not filing your return at all. For one thing, if you’ve paid more taxes than you had you, you will get your tax refund back; even if late. On the other hand, if you haven’t paid your taxes, you’re going to have to pay interest on this unpaid amount. Filing your return and paying the due amount will help avoid this interest piling up!
As of now, filing your taxes late doesn’t impact your Credit Score.