In a relief for salaried tax payers, the government recently extended the date for filing income tax returns
(ITR) by one month till August 31. Filing ITR
is a must for any responsible citizen earning an income. As per government records, around 68 million income tax returns
were filed during FY 2017-18, compared to 54 million filed during FY 2016-17. The number is expected to rise further this year. However, many people in India still don't file return despite getting remuneration.
It is mandatory to file tax return if your taxable income falls above the basic exemption threshold of Rs 250,000. One should file their tax returns on time as failing to do so will attract penalties. Apart from avoiding punishment, filing returns on time has several other advantages too.
Here's a look at top 10 advantages of filing ITR on time:
1. Being a responsible citizen: It is mandatory for every individual who earns a specific income and pays income tax on it, to file income tax return before July 31. In addition to this, those who are not eligible to file taxes can still file voluntary returns. When you file returns, you are fulfiling sort of a national duty which brings you into the mainstream as your income gets recorded with the I-T department with applicable tax (if there is any) having been paid. In other words, it's a sign of being a responsible citizen.
2. Helpful during loan applications:
Individuals who are planning to apply for home loans or vehicle loans, filing ITR
can prove to be very helpful. Almost all major banks ask for a copy of returns, thus keeping a steady record of filing ITRs may make life easier for you in such a situation. ITR
can have further significance as an income proof and an individual might be able to use it to get a loan in line with his/her income.
3. Loss adjustment: Losses incurred by an individual both short-term and long-term, speculative as well as non-speculative, capital or any other type of losses, which are not recorded in the tax return, cannot be carried forward or adjusted against the capital gains made in the subsequent years. So, if you do not file a return then you may not be eligible for any exemption against your tax liability in subsequent years.
4. To claim a refund:
There are cases when, after TDS deductions or advance tax filings, an individual ends up paying more than his/her actual tax liability. In that case, that person can claim a refund from the I-T department. However, if there is a delay in filing the return, ,the taxpayer stands to lose the interest payable on the refund amount.
5. Travelling Overseas:
During visa processing, foreign consultants may ask you for your ITR
records/receipts of previous years in interviews. The reason is to ensure that the person applying for the visa has an income source in India and does not actually intends to leave the country forever. Many major countries in Europe, US and Canada strictly follow this process and thus filing ITR
gains further importance.
6. Buying life insurance:
These days, ITR
receipts are required when one opts to buy a term policy with sum insured of Rs 5 million or more. Life insurance companies like LIC use ITR
documents to verify your annual income.
7. Filing of govt tender: ITR
documents also come handy when one need to fill a government tender. Government demands tax return receipts of the previous five years to ensure that the person filing the tender will be able to support the payment obligations.
8. Proof of income and tax payment for the self-employed:
Unlike the salaried class, businessmen do not get Form 16. Hence, ITR
receipts become an extemely important document for them.
9. Avoid penalties:
Filing income tax return is mandatory for individuals whose income falls in the tax bracket. Such individuals might be penalised up to Rs 10,000, besides interest, for not filing ITR
10. An important financial document:
Not only while applying for a loan or visa, ITR
receipts can be useful in many other ways as it is an important financial document. It is even more detailed than Form 16 as it entails your income and taxation along with revenue from other sources.
Citizens with income below the taxable bracket should also file ITR
as most of the above given advantages are also applicable for them.