In India, income tax returns are only required if an individual’s taxable earnings for the fiscal year surpass the Rs 2.5 lakh exemption threshold. Individuals with gross incomes below this threshold are exempt from filing tax returns. Even if your tax return is below the threshold, it’s still a good idea to file a tax return. Whether or not your income exceeds the threshold, there are certainly advantages to filing your income tax return on time. This article discusses the benefits of filing income tax returns on time.
What is the purpose of filing a tax return?
Individuals and corporations use the word “income tax return” to refer to a document or form that they use to disclose their taxable earnings, exemptions, and deductions for a certain fiscal year.
Taxpayers must file an ITR for a number of reasons, the most essential of which is to claim tax deductions.
There are seven distinct tax forms available, notably ITRs 1, 2, 3, 4, 5, 6, and 7.
By the deadline, every taxpayer must have filed an ITR. The use of ITR forms varies depending on the taxpayer’s sources of income, the quantity of money earned, and the taxpayer’s category, such as individuals, HUFs, corporations, and so on.
What are the advantages of submitting your tax return on time?
- Recover TDS(Tax Deducted at Source)
Even if you do not have taxable income, taxes might be withheld from your paycheck, fixed deposit, or any other source of income. If your income is less than Rs. 2.5 lakhs, banks are compelled to withhold 10% of your interest income from a Fixed Deposit (FD). To reclaim any TDS deducted, an individual must file an ITR.
- Avoid Income Tax Department Penalties and Notices
Those who fail to file their income tax returns on time may receive notices from the Income Tax Department. This might add a lot of unnecessary stress to your life. As a result, submitting your ITR on time is critical. There is a penalty for filing an ITR late. Failure to file an ITR on time might result in fines, according to ITR Rules and Regulations. The fine could be as much as Rs. 10,000.
- Carry Forward Losses
Any company can go into the red at any time during the fiscal year. Tax losses can be carried forward to the next year by filing an ITR.
- Obtain Visa Acceptance
Visa applications cannot be processed without an ITR submission. The international embassies require the ITR receipt. The embassy will evaluate the details on the applicant’s tax return in order to ensure that the applicant can afford to travel. Salaried and self-employed people can take advantage of this by filing their ITRs on time.
The Advantages of Filing an Income Tax Return (ITR)
Every responsible Indian citizen must submit an Income Tax Return, or ITR, on the internet once a year. It maintains track of your earnings as well as any taxes you owe during the year. Here are some of the advantages of filing an ITR.
The Income Tax Department receives information about your annual income and tax liability via an ITR. In fact, if your gross annual income exceeds the basic exemption limit, you have more than one source of income, you want to claim a tax refund, or you want to apply for a visa or loan, it is an obligatory activity that every citizen should undertake. Leaving aside the need to file an ITR, an ITR receipt can be useful in a variety of ways.
The following are some of the advantages of filing an ITR:
- Easy Loan Approval: ITR filing can assist you in obtaining quick approval for loans such as personal loans, car loans, and home loans. Lenders always ask borrowers to present ITR records from the previous three years when they apply for a loan. This allows the banks to determine your income stability, which aids in the speedy approval of your loan.
- One of the finest ways for proving your address and income: An ITR paperwork will save you time if you don’t have sufficient address verification while applying for a loan or other facility. In fact, you can use it to prove your income. As a result, keep your ITR receipt as proof of income and payment of regular taxes.
- Make a claim for a tax refund: One of the most significant advantages of filing an ITR is the ability to obtain a tax refund. You may be eligible for a tax refund if you invested in tax-saving instruments and paid more income tax than you should have.
- Compensate for losses: Individuals cannot carry forward losses incurred in the current fiscal year to the next fiscal year, according to income tax legislation. As a result, timely filing of an ITR is critical.
Suggested Read: Income Tax Planning