A lot of individuals seem to think that filing
tax returns is voluntary and therefore dismiss it as unnecessary and
burdensome.
Filing tax returns is an annual activity seen
as a moral and social duty of every responsible citizen of the country. It is
the basis for the government to determine the amount and means of expenditure
of the citizens and provides a platform for the assessee to claim refund, among
other forms of relief from time to time.
1. Filing returns is a sign you are responsible
The government
mandates that individuals who earn a specified amount of annual income must
file a tax return within a pre-determined due date. The tax as calculated must
be paid by the individual. Failure to pay tax will invite penalties from the
Income Tax Department.
Those who earn less
than the prescribed level of income can file returns voluntarily.
Filing returns is a
sign that you are responsible. Not just that, it also makes it easier for
individuals and businesses to enter into subsequent transactions since their
income is recorded by the tax department with applicable tax, if any, having
been paid
2. Your loan or card company may want to see your return
If
you plan to apply for a home loan in future it is a good idea to maintain a
steady record of filing returns as the home loan company will most likely
insist on it. In fact, you may even consider filing your spouse’s returns if
you want to apply for a loan as a co-borrower. Likewise, even credit card
companies may insist on proof of return before issuing a card.
Financial
institutions may insist on seeing your returns over the past few years before
transacting with you. In fact, the government may make it mandatory for them to
do so, thereby indirectly attract individuals to file returns regularly even
when it’s voluntary.
3. Avoid Penalty & Prosecution Notices
If
you are required by the law to file your return, then non-filing can lead
to the bombardment of income tax notices from the tax department.
Moreover,
if you have deposited any amount in your bank account during the demonetization
period or have entered into the high-value transaction, then you must file your
Income Tax Return, as the income tax department has launched ‘operation
clean money’ and many people who have done such transactions are being
questioned.The best way to avoid this situation is to file your income tax
return before 31st March 2018 and “Come Clean” in front of the tax department.
4. If you want to claim adjustment against past losses, a return is
necessary
Filing
returns on time has many advantages regardless of whether you draw the
prescribed level of income necessary to file returns.
Various
losses incurred by an individual or a business, both speculative as well as
non-speculative, short term as well as long term capital losses and various
other types of losses not recorded in the tax return in a financial year,
cannot be shown for exemption in subsequent years for the purpose of tax calculation. So it’s best to file returns regularly, because you
never know when you may want to claim an adjustment against past losses.
5. Claiming refund:
There
could be a possibility that there has been tax deducted at source (TDS) on some
investment made in the name of the individual. "If TDS has been cut, one
will have to file the ITR to claim refund of the same
6. For
VISA Processing
In case you are
planning on travelling abroad, be advised , foreign consulates ask for upto
last three years ITR with your visa application
The Middle East and
South East Asian countries are not so stringent, but Europe, Canada, and the US
are quite strict about this document.
ITR receipts are proof
that the person wishing to travel overseas has an income source in India and
does not wish to settle abroad and would return back.
Indian and many
foreign consulates recommend that you should carry some of your income proofs
such as ITR receipts, Form 16, salary slips, etc. for your overseas travel.
7.ITR is
Compulsory if you Own Foreign Assets
As a
citizen of India if you own any foreign assets then you are bound to file ITR
as per law. This includes overseas bank account. In case you fail to file ITR
then it can possibly lead to the fine and is also considered to be an
economical offense.
8. Filing
returns is mandatory in some cases
· Even if your income
level does not qualify for mandatory filing of returns, it may still be a good
idea to voluntarily file returns. In most states, registration of immovable
properties requires advancing as proof the tax returns of last three years.
Filing returns makes it easier to register the transaction.
·
All of us want our loved
ones to be happy even after our death. So, we always want to take as high cover
policy.But, these days many
insurance companies are adamant about checking your income tax return before
providing high life cover in order to verify your annual income.
