As of the financial year 2018, the number of taxpayers in India reached 6.86 Crore, which is almost double from 2014 statistics. The number of registered taxpayers grew by 15% as on 31st March 2019, reaching 8.45 Crore. This resulted because of the mandate importance of filing ITR. Consequently, income tax return filing is also expected to rise.
What is ITR?
Income tax return is a form used for declaration of the monthly gross income of an individual that is taxable and hence helps in determination of the income tax slabs group they fall under. Filing ITR on time makes you entitled to claim deductions and help in evaluation of your financial tax liability.
An individual/company needs to file income tax on below-mentioned conditions
- If an individual has a total gross income of more than Rs. 2.5 Lakh.
- If senior citizens (with age between 60 and 80) having a total gross income of more than Rs. 3 Lakh.
- Individuals aged more than 80 with an annual gross income of more than Rs. 5 Lakh.
- If you are a company bearing loss/profit in any financial year
What are the benefits of filing ITR regularly?
It is important that tax bearers know everything about ITR filing. So, look at some of the significant benefits as described below –
- No room for penalties
E-filing income tax on time can save you from paying extra penalties charged. An individual having an annual income below Rs. 5 Lakh is charged a penalty of Rs. 1,000. Henceforth, one should try to abide by the tax laws and file ITR before the due time.
- ITR receipts
ITR receipts that you receive against the filing of taxes are an important document that one must preserve. It can act as both your proof of income and proof of taxes paid for that financial year. Since the receipt comprises your total annual income from all sources in addition to your financial liabilities, it acts as a strong proof of creditworthiness for financial institutions.
The ITR receipt can prove to be a mandatory document while availing advances such as home loan. Most financial corporations and NBFCs rely on this document and accept it as an authentic document in favour of your income.
Also, as per Section 80C and 24(b), you will be saving tax when you take a home loan. These sections allow individual for tax exemption on the principal and interest paid on the loan.
- Hassle-free visa processing
Processing your visa application for developed countries often require documents that support your filing of income tax returns. Authorities assess your past ITR receipts and then only grant your visa application.
- Compensation of losses for the past financial year
To claim returns on losses faced by an individual or company during the previous financial year, they can claim adjustments if and only if they had filed ITR for that year within the due time.
- Tax refund claim
Claiming a tax refund and having it approved by the Income Tax Department is only possible when you have filed an income tax return on time.
- Save yourself from interest incurred for the delay in filing ITR
Section 234A of Income Tax Act defines that interest of 1% will be levied on the unpaid tax amount if one doesn’t file ITR before the due date.
These are a few reasons along with several others why you must file ITR on time. By doing so, you are not only abiding by the law but also gaining several benefits. Additionally, you also have one of the essential documents required for a home loan approval.