By holding numerous initiatives, the CBDT is continuously stressing to residents why it is important to file income tax forms. Citizens, on the other hand, are hesitant to file income tax returns and are uninformed of the benefits they may receive. Furthermore, most working people believe that if they are in the tax liability/exemption bracket, they do not need to submit an income tax return and do not qualify for timely filing benefits. So, here are five reasons why you should put on your thinking caps and consider preparing your income tax returns.
Also Read: Income Tax Return Filing
- TDS refunded
TDS stands for tax withheld at source. TDS tries to deduct tax at the point of payment from the source of income. According to the TDS idea, a person (deductor) who is responsible for making a specific type of payment to a specific individual (deductee) must deduct TDS and send it to the Central Government. The deductee would be entitled to a credit for the TDS amount deducted based on the deductor’s Form 26AS for TDS certificate. When you supply services that are subject to TDS, you may get your payment after deducting the TDS amount. The TDS deducted is your departmental tax credit. If there is no or less tax liability on self-assessment of tax liability than the TDS deducted, the difference can only be claimed if the ITR is filed. So, if you wish to claim a refund for TDS deducted, you must file an IT return.
- Proof of Income
Salaried workers receive form 16 from their employers, which serves as proof of income. However, in the case of self-employed individuals, some salaried individuals, company partners, freelancers, and professionals who do not receive Form 16, any supporting documents, or cash revenue, filing income tax returns can be used as proof of income. The income tax return is a statement that is a declaration made by you and filed with the IRS, and thus it becomes a legal proof of income. As a result, an acknowledgement of income tax return filed can be useful in situations where you are required to provide proof of income to meet specific requirements.
- VISA application simplicity
When applying for a visa in a developed country, such as the United States, the United Kingdom, Australia, or Canada, you will be asked to provide ITR receipts from the previous two years. Some embassies may require three years’ worth of ITR acknowledgement, while others may only want the most recent ITR receipt. Because the authorities are so concerned about your tax compliance, you must provide past ITR receipts. It enables them to examine your income, its source, and ensure that you can cover your trip’s expenses.
- Procurement and loan approvals
To sanction or approve a loan, most banks require a copy of your most recent ITR or three years of ITRs. They still require a copy of the ITR submitted, even if you supply your form 16 and other papers. So, if you plan to apply for a loan in the future and will be required to provide your I-T returns, you should start completing your income tax return now.
- Business loss carried forward
If you incurred a loss in the early years of your business and are now profitable, you can avoid paying higher taxes by filing those loss returns. If you file your return on or before the due date, you can carry forward losses for up to eight years under the income tax legislation. You can only carry the loss forward if you file your ITR on or before the due date. So, if your business is now experiencing losses, file your income tax return now to avoid paying more taxes in the future.
- Avoid Penalties and Interest
With effect from FY 2017-18, the IT Department imposes a penalty of Rs 10,000 on people who fail to file their income tax return under section 234F. In addition, failing to file an ITR on time may result in monthly interest charges. If the annual income is less than Rs 5 lakh, the penalty is Rs 1,000. As a result, filing your ITR on time helps you avoid fines and interest. It also saves you time by avoiding time-consuming income tax assessment procedures.
- Approval of Credit Cards
Credit card approvals, like loan approvals, may necessitate the submission of income tax returns as proof of income. You must also provide an ITR as proof of income when upgrading to various premium and elite cards.
- Raise Funding for Professionals and Freelancers
Unlike salaried workers, freelancers, self-employed business people, and professionals who do not receive Form 16, they do not receive Form 16. They can preserve their books of accounts and even account for them, but only if the statistics from the books and accounts are represented in the income tax returns is it appropriate for funding. As a result, if you want to raise money from investors, you must file your tax returns on time.
- Proof of Address
Because your address is printed on the acknowledgement of income tax forms filed, it can be used as extra proof of your address.
- Increasing insurance coverage/premium investments
If you don’t file taxes, your situation may be seen as a tax evader by investment/insurance companies from which you seek to raise funds. Insurance firms and investment organizations will not issue you products with higher coverage if they suspect you are a tax evader. To make that investment or increase your insurance coverage, you must file your tax return on time.