Income tax return is a declaration of income by a person who is earning more than the amount of income which is not chargeable to tax. Currently there is no income tax up to the amount of INR 2.5 lakh. However, filing of income tax return is a voluntary decision of a person earning below the basic salary slab.
To explain the benefit of filing ITR and clearing doubts about the ITR, we are here to explain you few points in comprehensive way that will help you in understating the basic of Income tax return and its benefits.
Let’s start with the basic of Income tax return with any further delay:
- Easy processing of Loan: When you apply for bank loan, financial institutions like Banks and NBFCs ask you to submit KYCs and Income proof. Income proof documents include Income tax return. Bank check your income tax return and determine your eligibility criteria for loan. Income tax return is a mandatory document without which bank may not process your loan file and sanction the loan. Hence filing of ITR will help you in getting smoother and faster loan.
- Claiming Refund: Any person can claim income tax refund if TDS deduction is more than the amount of tax liability. When a person is not liable to file ITR but his TDS is deducted by any party than he can claim his refund from the income tax department by filing ITR. IT department has now smoothened and streamlined the process of income tax refund. Income tax refund are getting credited in the banks of taxpayer within few weeks.
- Fast Visa Processing: Many embassies require you to submit Income tax return for processing of VISA. ITR acts as income proof of applicant, and it helps embassy to process visa faster. ITR filer can take benefit to get their visa cleared.
- Legal Document: Income tax return acts as a legal document. There are many departments where copy of Income tax return is submitted and sometime, they don’t accept your application if ITR is not annexed.
- Getting Government Bids: It has been seen that government asks every bidder to submit bid application along with Income tax return and financial statement. As we mentioned earlier that income tax return is an income proof document and ITR helps government authority determining wealthy bidder.
- Forward your Losses: The Income tax act 1961 contain provisions to carry forward your losses. In generally all losses incurred during the year is allowed to carry forward, provided you have filed income tax return on or before the due date. Every loss has a life and loss can be carried forward up to a certain period prescribed under the income tax act. Hence, when you are not earing and incurring losses then it is better to file ITR with in a due date and carry forward to the coming years.
- Save Penalty: Filing ITR on time can save you form income tax penalty and interest. IF you were required to file ITR but for any reason you could not file, department may levy penalty minimum INR 1000, and this can go up if income is more than the upper limit.
- Avoid Income tax notice: It has been seen that Income tax department is serving notices to the person who has not filed income tax return, but transaction has taken place in his account for Example when TDS is deducted by bank on Fixed deposit or Sale, purchase of shares transaction happened, but ITR is not filed for that year, then Income tax department wants you to share details of your income and losses, though you are not liable to file income tax return and pay taxes
It is advisable to file always ITR on time. It helps you in monetary and non-monetary terms. People generally don’t file ITR and think that ITR in not need and I have not earned so much, but practically things are different. ITR is needed everywhere for the Private office to government tenders.
