We understand you may find filing for IT returns burdensome, especially if you are young and have barely filed a couple of IT returns. But its benefits are far more than the labor involved in filing it. Also, it is the duty of all the responsible citizens of the country.
The income tax laws state that filing IT returns is mandatory for some but voluntary for others. Irrespective of the category you fall into, it is imperative for you to file it. With the tax department allowing online income tax return filing, the process takes minutes to complete in most cases.
This article discusses five crucial reasons why you must file income tax returns periodically.
Who must file income tax returns mandatorily?
As per income tax laws, any assessee whose gross total income (GTI) is above the lowest income tax slab allowable for his/her age has to file ITR mandatorily. The basic exemption limit is ₹ 2.5 Lakh, ₹ 3 Lakh, and ₹ 5 Lakh, for assessees below 60 years, between 60 and 80 years, and those above 80 years, respectively.
There are certain instances where individuals have to file an income tax return even if their GTI is below the basic exemption limit. If you also fall under any of the categories mentioned below, ITR filing is mandatory for you.
If your electricity bill exceeds ₹ 1 Lakh for a single bill or in totality for the financial year.
If you have deposited ₹ 1 crore in your current accounts maintained with a bank or cooperative bank.
If you are an ordinarily resident individual with income from foreign countries AND/OR assets in foreign countries AND/OR have signing authority for any account outside the country.
If you have spent ₹ 2 Lakh on yourself/others for travel to a foreign country.
If your GTI exceeds the basic exemption limit before claiming a deduction on capital gains incurred under any of the following sections – 54, 54B, 54D, 54EC, 54F, 54G, 54GA, or 54GB.
Reasons to file an income tax return
Here are five reasons you should not miss out on filing income tax returns.
1. It makes loan processing easier.
Suppose you want to apply for a home loan or any other loan (other than mortgage). In most cases, a lender will ask for income proof before sanctioning a loan. The process will include submitting your income tax returns for the last two or three financial years.
2. It helps you claim any carried forward losses.
If you have incurred losses under the heads “Capital Gains” or “Profits and Gains from Business or Profession” and want such losses to be carried forward to the next financial year, you can do so only by filing your income tax return.
3. It allows you to claim TDS refunds.
If your employee deducts tax at source or you have a contractual agreement that invites TDS, you can claim a deduction for the same by filing your income tax return for the year within the deadline (July 31 or as declared of the succeeding year). In such cases, the income tax department calculates your net tax liability after adjusting the TDS paid. If you are not required to pay tax, you can claim a refund by filing your ITR. You can track your refund by checking your income tax return status.
4. It contributes to nation-building.
Any amount you pay as tax helps in building your nation. It is one of the major contributors to the government’s cash inflow. For FY19, the government collected ₹ 9.45 Lakh crore as direct taxes. The government can use the amount for building infrastructure or for other developmental activities.
5. It will help you with visa or credit card applications.
If you are applying for a visa for an international trip or a credit card, the issuer will demand income proof from you. In most cases, you are required to submit your income tax returns for the last three years. It will help the other party ascertain if you are eligible for a visa or a credit card. If you intend to visit countries like the USA, Canada, or any part of Europe, you must submit your ITRs during the verification process.
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The CBDT (Central Board of Direct Taxation) has already released the latest ITR forms for FY20 on April 2, 2021. So, you can file your income tax return for 2020-21 today!