People who earn should pay tax to the government and this is mandatory. Salaried and self-employed people must make sure that they file the income tax returns without fail. There are several benefits that you can enjoy when you file income tax returns every year. Here you would know about some of the significant benefits of filing income tax returns.
Filing tax is around the corner. Indeed, it is that time again when you need to record your income tax. For a few, filing tax returns can be a repetitive procedure. Be that as it may, the Government has streamlined the duty recording process making professional tax payment a lot simpler and less burdensome for citizens to file returns. With online professional tax registration, individuals can do it by all by themselves hassle free.
According to the new law, a fine of Rs 5,000 will be imposed if the return is filed after the due date yet before December 31 of that year and Rs 10,000 post-December 31. In any case, as relaxation to small taxpayers, if your salary is not more than Rs 5 lakhs, the utmost fine imposed will be Rs 1,000. However, these progressions will be imposed for the financial year 2019-20.
Why should you file an income tax return?
Under the Income Tax Act, individuals under the age of 60 years have to file professional tax return if absolute payscale surpasses Rs. 2.5 lakhs. On account of people beyond 60 years old, yet not over 80 years, income tax filing is required if all-out pay surpasses Rs.3 lakhs. Individual beyond 80 years old is required to file an income tax return if the absolute salary surpasses Rs.5 lakhs.
Consequences for not filing an income tax return
Not filing an income tax return would result in:
- A notice from the Income Tax department
- Not having the facility to get a discount of overabundance TDS Deducted.
- A fine interest of 1% every month or fraction thereof will be indicted until the date of remittance of taxes. For returns of the financial year 2018-19 and onwards, fine of Rs 5,000 will be indicted for returns recorded after due date however before 31st December. In the event that returns are recorded after 31st December, a fine of Rs 10,000 shall be levied. Be that as it may, fine will be Rs 1,000 for those with pay up to Rs 5 Lakhs.
- Not having the capacity to set off losses. Losses caused (other than residence property loss) won’t be permitted to be carried forward to successive years, to be set off against the upcoming profits.
Why you need income tax return:
- There is a misinterpretation that individuals without taxable pay do not have to document their tax forms. The Income Tax Department recommends the documenting of a professional ITR if your gross absolute pay surpasses Rs.2.5 lakhs before any subtractions, surpasses Rs.3 lakhs for those over the age of 60, or Rs.5 lakhs for those over the age of 80 years.
- If you are a resident of India and have resources or investments overseas, it is compulsory for you to record returns regardless of whether your pay isn’t taxable. On the off chance that you don’t fall in any of these classifications, it’s not required for you to record an ITR.
3. Even if your earning is under the taxable limit, you may have paid taxes according to government obligations on it. An individual can file a return to get this extra charge paid by means of TDS, or self-appraisal, in the applicable budgetary year. Getting money back of your taxes is like getting a check credited. In the event that you don’t document your returns, you basically let go of a conceivable reimbursement.
- If you have plans of moving to another nation or planning to work abroad, you should have your professional tax for the ongoing years prepared. Most government offices, particularly the US and UK, request documents of ITRs to process your visa submission.
- If you wish to apply for a loan, for example, car loan, home loan, etc. or even a credit card, you are required to give the ITR to the latest evaluation years – alongside different documents – to the bank. The ITR goes about as a report card of your income. It enables the loan payer to survey your reimbursement limit.
- If you have suffered capital misfortunes, the Income Tax Act enables you to carry forward misfortunes for eight back to back years and counterbalance it against future profits and earnings. On the other hand, you need to have documented an ITR consistently, with no break, to profit this advantage. Regardless of whether your salary is not taxable, you may have caused misfortunes that should be conveyed forward. So it is compulsory for you to petition for return in the year you have brought about misfortunes to convey them forward.
- Even if your pay scale does not fall in any of the assessment sections, you may have different earnings, for example, salary from tax-exempt bonds, or other non-assessable sources, which sum over Rs. 2.5 lakhs. You should record an ITR demonstrating your non-assessable profit, which could go about as evidence for income.
- Under section 234F of the Income-Tax Act, if an individual required to handover a return of income by July 31 neglects to do as such, at that point a charge of Rs 5000 will be imposed if the arrival is couldn’t do so before 31st December. But, the payment will be Rs. 10,000 if filed post 31st December. Besides, if the total earning of the individual doesn’t surpass Rs. 5 lakhs, at that point charge payable, will not surpass Rs 1000.
- An individual is required to document an Income Tax Return compulsorily when one is in receipt of pay gotten from property held under a trust for non-profit organization or religious reason or a political group or a research institute, news channel, hospital, merchant union, non revenue driven college or educational institution, any organization or trust.
10. Filing income expense form doesn’t just make you a responsible citizen however it likewise guarantees smooth administration. Likewise, it prevents you from the gigantic problems if you are ever compelled to outfit the return under a show-cause notice (under Section 148) from the I-T department.
Thus filing income tax returns is not for the purpose of paying tax to the government, it has several other benefits as mentioned above. Income tax returns can be used as proof for various proceedings. This is the reason that people who earn less than the taxable income also file the annual tax returns.