According to the Income Tax Division proposal, taxpayers who file returns earlier will get tax exemption, while those who file later will face additional costs.
Under the proposal, taxpayers filing returns during the first quarter (July-September) of the financial year can get a rebate of up to 5 percent on the tax payable.
Those who file returns during the second quarter (October-December) will have to pay the standard amount of tax without any exemption or penalty.
Taxpayers filing returns during the third quarter (January-March) may have to pay an additional 2-5 per cent of the tax amount as penalty along with their regular tax liability.
Those filing returns during the fourth quarter (April-June) may face additional charges of 5-10 per cent of tax payable.
Authorities can also impose penalties on individuals who file returns despite having no taxable income.
Since all taxpayers now submit returns online, the system will automatically calculate taxes, exemptions and any additional charges.
Authorities may also introduce a system to prevent taxpayers from submitting returns online until they pay the additional tax amount in full.