CBDT has been conducting various to make citizens realise the importance of filing Income Tax Returns. Yet there are citizens hesitant to file Income-Tax Return and are unaware of benefits they may procure from filing income tax returns. Most of the gen-z and millennial generation that is back bone of start up culture feel and majority of working population feel that if they fall under the tax lability / exemption bracket they need not file income tax return and can not avail the benefits associated with timely income tax return filing. So I have got 10 reasons that may make you put on your thinking caps and start thinking about filing income tax returns. Here me putting out the benefits you may have if you actually start filing your income tax returns.
1. Refund on TDS
TDS refers to tax deducted at source. The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor. So when you provide services which are under the preview of TDS then on receiving your payment you may receive amount after deduction of TDS . The amount of TDS is your tax credit with the department. On self assessment of tax liability if there is no liability or less liability than the amount deducted the same can be claimed only if the ITR is filed. So, if you want that you receive such TDS deducted as refund then its important to file IT return.
2. Proof Of Income
Salaried individual obtain form 16 from their employer and that works as proof of income for them. But, in case of and self employed person, professional, freelancer, partner of a firm and certain salaried individuals where you don't receive form 16 or receive cash income here income tax returns can work as your proof of income. It is a statement that is a declaration given by you and filed with department of taxes and hence it becomes a valid proof of income. An acknowledgement of income tax return filed can be in places where you need to provide proof of income to meet certain compliance.
3. Ease in VISA application
If you are traveling overseas, Embassies of developed countries like the United States, United Kingdom, Canada, and Australia ask you to furnish ITR receipts of the last couple of years at the time of the visa interview. Some embassies may ask for ITR receipts of previous three years, while some others may ask for the most recent certificate. These authorities are very particular about your tax compliance and hence, you are asked to furnish past ITR receipts. This helps them assess your income , its source and ensure that you are able to take care of the expenses on your trip.
4. Loan approvals and procurement
Apparently, majority of the banks ask for a copy of income tax returns either latest or for at least three consecutive years to sanction/approve a loan. Even if you have your form 16 and other documents in place they still would ask you to present the income tax return filed. So if you are planning to take a loan in the future, where you need to furnish your I-T returns then it would be smart if you start filing your income tax return.
5. Carry forward business losses losses
If you suffered a loss in your business in initial years and now making profits you could have saved on paying higher taxes if you had filed those loss return too. As under the income tax act, it has clause where if you file your return on or before due date you can carry forward losses made for a period of 8 years. Only, on filing your ITR on or before due date can help you carry forward loss. So now if currently you are suffering losses in our business it will be a pro move that you file your income tax return and save your self from future tax burden.
6. Avoid Penalties and Interest
The Income Tax Department levies a penalty of Rs 10,000 under section 234F on individuals who do not file their income tax return with effect from FY 2017-18. Also, if you don’t file ITR on time, the belated return could lead to extra interest on monthly basis for the remaining tax payable by you. The penalty has been kept at Rs 1,000 if your annual income is not more than Rs 5 lakh. Filing ITR on time avoids unnecessary penalties and interest. Also saves your time from unnecessary assessment procedures under the income tax provisions.
7. Credit Card Approval
Just like in case of loan approval credit card approvals may require furnishing income tax return filed as proof of income. Also, upgrading to certain premium and elite cards require you to furnish ITR as proof of income. So avail the benefits of credit card and unnecessary rejections you need to furnish your income tax returns.
8. Raise Funding for Freelancers & Professionals
Unlike salaried individuals freelancers, self employed business person or professionals don't receive a form 16. They may keep their books in place and even account for them but it will consider good for funding if figures from books and accounts are reflected in income tax return as well. So, to raise funds from investors as a individual you need to timely file your income tax returns.
9. Address Proof
The acknowledgement of income tax return filed bear's your address hence the same can be used as additional proof of address.
10. Invest in higher insurance cover / premium investments
If you don't file taxes it is possible that case may be interpreted as a tax evader on grounds of non compliance by investment/ insurance companies where in you want to raise your investments / insurance covers. If insurance companies have reasons to believe that you are a tax-evader, they will not give you policies with more cover and same goes with investment companies. So, in order to make that investment or raise that insurance cover you need to timely file your income tax return.
In addition to the above mentioned points consider this as a nation building process. Taxes is one of the primary sources of income for the government, the money collected in the ex-chequer is used for building infrastructure and other development activities. The government spends the collected money on defence, healthcare, infrastructure, education, and launching various schemes for the masses. Thus, on macro level will help us build our nation. So if the above mentioned points don't interest you then think on lines of your contribution in building your own nation.
So, be smart and file your tax returns before its too late to do so.
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