Article
What is the purpose of filing IT Returns?
Many people seem to think that filing their tax returns is optional. Therefore, they decide against it assuming it is unnecessary and tedious process. Well, this is right, as filing of Income Tax Returns is an annual activity that is considered a moral and social duty of every citizen of the country. The government determines the amount and mode of expenditure of the citizens when they file their IT Returns. Filing of Income Tax Returns also serves as a platform for the assessee to claim refund from time to time.
What are the advantages of e-filing ITR?
Here are the advantages of filing your IT Return on or before the e-filing due date: -
- The Government makes it mandatory for every individual who earns a taxable income to pay their income tax and file their before the e-filing due date. Failure to pay your taxes or late filing of ITR can invite penalties from the Income Tax Department. Those individuals who do not have a taxable income can also Income Tax Returns voluntarily. Filing IT Return is a sign of responsible citizen
- In some cases, it might be mandatory to file your IT Return. Even if you do not earn taxable income, it is always a good idea to file your tax return by choice, as in many states in India, the registration of immovable properties may demand a copy of your tax returns of the last 3 years. If you have filed your Income Tax Return, this process will become easier.
- Moreover, if you are planning to apply for a loan anytime in the future, maintaining a steady record of filing IT Returns will aid in getting the loan, specially in case of a home loan. And, in case, you plan on being a co-borrower, filing tax returns for your spouse will be an added advantage. Even credit card companies insist on providing a copy of the tax returns before issuing you a credit card. This holds true for most financial institutions before they transact with you. The government might make it mandatory for financial institutions to demand proof of tax returns before making any transactions with an individual and/or company.
- Filing of Income Tax Return also aids in claiming any adjustment against past losses. Different kinds of losses, speculative or non-speculative, short-term or long-term capital losses or any other kind of loss that is not recorded in the tax return in a given financial year, cannot be shown for exemption in the subsequent years for the purpose of tax calculation. Therefore, it is advisable to file your tax return because you never know when you might need to claim an adjustment against your past losses.
- If you haven’t filed your original IT Return, you cannot subsequently file a revised return, even when you really need to. As per the Income Tax Act, 1961, failure to file your Income Tax Return on or before the due date, can lead to a penalty of Rs.5,000.
