Every citizen in India needs to pay the government tax on their income. This rule falls under the Income Tax Regulations. Be whoever you are from an association, firm, local authority, LLP, or even a Hindu undivided family. Your income for every financial year is taxed according to the Income Tax Laws. That is why filing the Income Tax return on an annual basis is important. To do so, you can choose to file an income tax return either online or offline that suits you best. So, let's move forward to know more about the income tax return and the benefits one can get from it.
What is Income Tax Return?
ITR or Income Tax Return is the form that a person submits to the Income-tax department of India to file information about his or her income and the amount of taxes payable in that particular year. The filed information must apply for a specific financial year between 1st April to 31st March of the following year.
Your income can be of many sources, for example, salary, sale of house or property, dividend or capital gains, profit in business, and the interest received, among others. However, if you have paid extra taxes during the year, then the income tax department refunds your money as soon as possible.
What makes filing ITR compulsory?
Income tax rules depict that if you cross the limit of earning, that is, try to get exempted from being taxed by the government, you must file the tax return as per the tax slabs appointed for you each year. However, if you by any chance miss the due date for filing, you may be penalized. And at this time also become a disincentive in getting your visa approved or getting a loan for future
Filing income tax returns is often considered to be a troublesome process; that is, people keep themselves at bay from filing them.
But as a citizen of a country, it falls under your responsibility to file your returns every year. Because other than being a responsibility, Income tax can be very beneficial to your needs. Even the TDS holds some common benefits. Here's the list of various ways in which Filing an Income Tax return can benefit you.
1. Acts as a crucial document for loans
When you finally decide to buy something bigger or better, you might leave with one option, i.e., a loan. So, while applying for the loan, the bank might need you to submit some documents like an Aadhar card, pan card, Voter ID, etc. But you can even download TDS return form and it can get the job done because TDS return and Income Tax Return forms are the income proves. And the bank generally asks for the last three years ' ITR. This is done in order to have access to your past and current financial situation and whether you are capable enough to pay the loan or not.
2. Always acts as a legal document
The income tax return can have immense legal value. As it is recorded with the government, it acts as legal proof in two ways: identity proof and income proof. This tax return can be used as identity proof in different scenarios. For example, while you go to apply for the Aadhar Card, the government accepts it as proof of address.
In the case of the latter part, the ITR form contains a brief list of all your incomes and expenses. On the basis of which your tax file is calculated. Thus ITR can be used as income proof, as it shows some of the transactions you made in recent times.
3. You can claim the deductions using it
The government sometimes allows certain deductions in order to reduce the burden on the taxpayers and thus encourage more people to pay their taxes. Here, the exemptions and deductions can be availed in some investments and thus help reduce the tax you do not pay on time.
At this point, you can also claim back the TDS and the rebates. But to have all these benefits, you need to file an Income tax return. If you do not file the ITR, you cannot claim the deductions as well.
4. Helps in your foreign trip
Going abroad takes a lot of planning and cumbersome procedure. Above all, if you do not File the ITR, it may deter your plans for your foreign trip. ITR is one of the most important documents which is required by the countries you are visiting. The reason is having a history of filing income tax returns can help you for the seamless journey of getting your visa approval. It also gives the embassy a little bit of an idea about your income.
5. Gladly avoid penalty and punishment
The taxes you pay are governed by the Income Tax Act 1961. So, if you are eligible to pay the taxes but fail to file the income tax returns, you may attract the charges. As a result, the income tax officer can levy you a penalty of up to five thousand rupees, along with other punishments. If you fail to file the returns.
So, till now, you might have a pretty good idea why filing the income tax return is essential. It does not only help you, but it also helps your nation. You need to know that the tax you pay, the government uses it to build proper infrastructure and also improve the other facilities of the nation, like medical defence, etc.
Therefore, the more you file the return, the more government does good for us.
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