Tax season is here and you must be wondering whether to file the tax return or not.
So for those who are of the view that filing ITR is not an obligation as their income falls in tax exemption category, the following benefits of the same can be big thought changers.
Income tax return gives a detailed picture of total income earned and taxes paid in a financial year.
Here are the reasons as to why you should not give it even a second thought. And at the end you will be convinced that income tax return is going to serve you in many ways.
1. Easy Refunds
Good news for tax payers (tax deductees), now, you can claim refund of excess taxes deducted by Bank, tenant, employer etc on your income. Even if your income is less than exemption limit and your TDS is deducted, the only one way to get it back from income tax department is by filing Income Tax Return.
2. Income and Address proof
Your income tax return serves as an important document as it contains your address and annual income. It acts as a primary income proof considered by many institutes as it contains more information about your income than form 16, 16A or bank statements.
3. Loan Approval
Many banks and financial institutions ask for tax return as a proof of income before sanctioning any loan. The quantum and eligibility of loan depends upon one’s income earned in past years, so tax returns of past 3 years are asked during loan application process.
Also some credit card companies demand tax return before issuing credit cards.
4. Avoid penalties
Income tax department levies penalty of Rs. 10,000 on non filers w.e.f A/Y 2018-19(F/Y 2017-18).So to avoid paying heavy penalties in future, one should file the tax return on time.
5. Quick Visa Processing
Tax return of past years are asked by Visa authorities before applying Visa.
Embassies of countries like USA, UK ,Canada are always interested in knowing your past and current income status before sanctioning your visa. So, the only source considered here is your ITR.
6. Carry forward of losses
Capital losses cannot be carried forward in next year unless you file income tax return. So, even if your income is below exemption limit, you must file your tax return.
7. Claiming deductions and exemptions
It is mandatory to file tax return in order to claim deductions(specially salary employees) like 80C(e.g Contribution to PF etc) or 80D and so on.
Also to claim long term capital gains exemption at the time of sale of assets one should compulsorily file tax return (selling an old house and reinvesting in new residential property).
So, although the income is below exemption limit after claiming deductions or after claiming capital gains exemption, it is necessary to disclose such exemptions in tax return.
8. Proof for self employed and professionals
Self employed or professionals do not get form 16(TDS certificate), hence it is always advisable to file income tax return, so that they can get easy funding in future.
Also ITR helps them to procure more work or clients in future from renowned organizations.
Last Date for Filing Tax Return for Individuals is 31st July, 2022
Need an expert advice? Hire a professional CA to calculate your taxes and file tax return on your behalf. Click on the link below:
Income Tax Filing