When it comes to filing of income tax return, many Individuals are of the opinion as to why the return must be filed. Though salary class individuals duly file their IT returns due to compulsion of having Tax Deduction at Sources, there are many other categories of Individuals who are ignorant and escape timely filing of return. Some of the categories includes individuals who are running small proprietary businesses, home tutors, house wives who take classes like that of cooking, stitching, artwork, etc. etc.
Many individuals think as to why waste their time on this activity when a lot many others are not filing their returns - a fact as mentioned by our Finance Minister Shri Arun Jaitley ji during his budget speech this year.
Filing of Return - on time is an extremely important tool to create your financial history. When you file your tax returns every year, you manage to create your financial record with the tax department.
This financial / tax history is positively viewed and favorably used by most agencies with whom you may need to interact at times. Many other benefits that accrue due to proper and timely submission of IT return are as under:
1. Filing ITR helps you in creating your capital base which may be required at the time of taking loan or applying for visa. It is a standard proof of income of a person which establishes record with the tax department.
2. In case there has been a tax deduction at source timely filing of ITR helps you in getting refund (as per relevant sections of law).
3. The Permanent Account Number (PAN No.) required to file ITR also acts as your ID proof and is accepted by various Govt. / Non Govt. agencies.
4. In case you inherit a property which is being sold may result in long term capital loss (LTCG) depending on provisions of Income Tax Act. Timely filing of ITR helps in carry forward of losses. If you do not file returns, you will not be able to carry forward capital losses (short-term or long-term), if any, in a financial year to be adjusted against capital gains made in the subsequent years. A long-term capital loss in one year can be carried forward for eight consecutive years immediately succeeding the year in which the loss is incurred. Long-term capital loss can be adjusted only against a long-term capital gain in the year. Same is the case if you incur loss in your business / profession.
5. Buying life cover above a certain limit. These covers are available against your ITR documents to verify annual income.
6. Banks may not issue a credit card to you if you have not been filing your returns regularly.
7. Filing of income tax return of past years is also possible.
8. By filing your returns regularly, you also create a track record with the Income Tax Department.
9. For obtaining Govt. tenders, registration on various panels etc. Income Tax Return is mandatory.
10. Finally, by filing your tax returns and paying taxes regularly, you contribute your bit to the national income.
Now that we have to file return in electronic mode, i.e. online, we need not bother about keeping record of the same as all of our Income Tax records are available to us on a single click in safe Govt. maintained portal.
The author is a practicing Chartered Accountant in Indore. Prior to practice he has also worked for various organizations like Bharti Airtel Ltd,, Tata Teleservices, Reliance Communications, Real Estate companies etc.
Tags itr Income Tax