An Income Tax Return (ITR) is a form issued by the government where individuals declare their income, expenses, deductions, exemptions, taxes paid, etc. Individuals whose income is less than ₹ 2,50,000 are not required to file Income Tax Return.
It is mandatory to file an income tax return to be eligible for deductions under sections 80C, 80D, etc., for individuals whose income is more than ₹ 2,50,000. All of the deductions will help you reduce your taxable income.
The majority of people regard filing income tax returns as a time-consuming process. That is why many people choose not to file tax returns. However, as a responsible citizen, you must file your returns on time each year. Every working Indian has a moral obligation to do this. Therefore, filing ITR can also be beneficial to you.
As a result, we have outlined several reasons why every Indian citizen must file an Income Tax Return in this blog.
Following is the importance of ITR filing –
The government requires that people who make a certain amount of money annually file a tax return by the deadline specified. The person is responsible for paying the tax as calculated. The Income Tax Department will impose fines for unpaid taxes. Those who make less than the allowed income threshold can voluntarily file returns.
Making returns demonstrates your responsibility. It also makes it simpler for people and businesses to engage in subsequent transactions because the tax department records their income after deducting any applicable tax.
Although your income is too low to require you to file taxes, it might still be a great idea to do so voluntarily. The last three years' worth of tax returns must be presented as proof when registering immovable property in most states. Therefore, it is simpler to note the transaction when returns are filed.
It is a good idea to keep a consistent record of filing returns if you intend to apply for a home loan because the lender will probably insist on it. If you want to apply for a loan as a co-borrower, you might even consider filing your spouse's tax returns.
Similarly, before issuing a card, credit card companies may demand proof of return. Likewise, before engaging in business with you, financial institutions might require your returns from the previous few years. The government might make it obligatory for them to do so, subtly encouraging people to file returns regularly even when it is optional.
Whether or not you receive the required income to file returns, there are numerous benefits to filing returns on time. To calculate taxes, considerable losses incurred by an individual or a business, including speculative and non-speculative, short-term and long-term capital losses, and various other types of losses, cannot be shown for exemption in subsequent years.
As a result, it is best to file returns regularly since you never know when you might need to request a reduction for prior losses.
Even if the assesses truly needs to file a revised return, he cannot do so if the original return has not been filed. The Income Tax Act imposes a Rs 5,000 fine for failure to file returns.
Even though filing returns is a voluntary activity, there are times when failing to do so may have legal repercussions, particularly if they later need to file a revised return.
In conclusion, filing your income tax return benefits you and the country. The government uses your tax dollars to improve the nation's infrastructure and other services like healthcare and defence. In addition, the government can spend more money and give us a better country if more people register.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.