There is always been a Question most of the individuals ask me before filing their Income Tax Returns, why should i file my Income Tax Returns ? What are the uses ? Is it compulsory to file ? etc
For all those who have the similar doubt there are few important points to know what are the advantages or benefits of filing your Income Tax Returns.
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- ITR Receipt serves as an important document : Having an ITR receipt is important because it is more detailed than Form 16, entailing your income and taxation along with revenue from capital gain, income from house property, professional & Business Income and other sources.
- Can be used as address proof : ITR receipt contains registered address, which can serve as residential proof.
- Helps the bank loan documentation process easier : Being a diligent income tax filer makes it easier for banks to assess your source of income when you apply for loans like an auto loan, home loan, professional loan etc.
“Banks usually ask for copies of tax returns filed for previous 2-3 years at the time of applying for the loan to ascertain income capacity of the individual. Hence, to apply for loans a tax return would be required to be filed,”
- Previous year losses can be compensated in the next financial year : Unless you file the ITR, you cannot recompense your expenses/losses in the previous financial year to the current. As per the income-tax provisions, if tax returns are not filed on time, unadjusted losses (with some exceptions) cannot be carried forward to future years. Hence, to ensure that the losses are carried forward for future adjustment, a tax return would be required to be filed.
- Helps to avoid extra interest : If you don’t file ITR within due dates, the belated return could lead to extra interest at 1% per month for the remaining tax payable by you.
- Avoid penalties or scrutiny from the tax department : From FY 2017-18 Rs 10,000 would be levied for non-filing of ITR. This black mark will remain for years to come. Click here to view the penalty for delayed filing of returns
- Credit Card Processing : Banks can reject your credit card application if you haven’t filed your ITR.
- For a hassle-free visa application procedure : At times visa authorities ask for copies of past tax returns, hence to apply for a visa a tax return would be required to be filed. Embassies, especially those of US, UK, Canada etc. when processing your foreign visa application, are particular about your tax-compliance.
- To buy an insurance policy with a higher cover : If insurance companies have reasons (non-compliance) to believe that you are a tax-evader, they will not give you policies with more cover.
- Makes life easier for freelancers and independent professionals : Freelancer or self-employed people don’t have Form16. This is the only document they have to show that he has filed the ITR. Without this, they can face funding issues and transactional problems.
Therefore these are the few advantages each individual will be availing for filling their Income Tax Returns.
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