Let Tax2Win experts file your belated return & claim your TDS
ITR is a tax return form that people use to declare their income and assets to the IT department in India. It contains information about the taxpayers' personal and financial information. ITRs are fundamentally a taxpayer's self-declaration of their earnings, assets, refund to be claimed and appropriate taxes paid. While it is generally completed electronically, senior persons have the option of doing it manually as well.
Not everyone is required to file an ITR. Taxpayers can decide whether or not they need to file an ITR based on a variety of variables. These elements are listed below:
Nonetheless, as stated earlier, there are a lot of benefits of filing your tax returns on time and therefore, it is imperative that regardless of whether you fall in the category of taxpayer or not, you should file your ITR.
Individuals and businesses can avoid significant fines by completing ITRs on time. If you file your ITR after the deadline, you may be charged a late fee of up to INR 5,000. It is in addition to any other penalties imposed by the Act. Plus, you may be required to pay the interest amount on the penalty.
If you keep filing ITRs for yourself or your spouse, it will help you in the future if you happen to meet with an accident. Insurance companies require proof of income to calculate the amount of the claim, and if any returns are missing, especially from the last three years, the claim amount may be reduced or even denied because the court accepts ITR as the only evidence.
In addition, if a person who had been filing income tax returns on a regular basis for the previous three years dies in a car accident, the government is obligated to compensate the deceased person's family. This compensation can be as high as three times the dead person's average income.
Proof of Net Worth
ITR is the most credible proof of your net worth or income. The salaried class benefits from Form 16, which is issued by their company and serves as verification of income. Self-employed people, on the other hand, can use the ITR filing form as proof of income. It provides a full breakdown of these persons' revenue and expenses for each given fiscal year.
It can be used for various purposes, like sourcing loans, getting insurance cover, purchasing properties and other valuable assets etc. If you are required to furnish a document of your income or net worth, ITR solely can be your resort.
If your refund of TDS deducted earlier is due, you must file tax returns; otherwise, you will have to forgo your refund. Some taxpayers may prefer to invest primarily in fixed deposits. Tax is deducted at source (TDS) which is almost 10% on such investments.
If you submit an ITR, you can save money on taxes on income from savings vehicles like term deposits. By submitting an ITR, you can also save money on your dividend income. While these instruments are taxed, ITR refunds can be used to offset the tax liability.
Even if your total gross income from various sources exceeds Rs 250,000/Rs 3,00,000/ Rs 5,00,000 and you have invested in such a way that your net income is less than Rs 250,000/Rs 3,00,000/ Rs 5,00,000 in a year, you can benefit from tax refunds and reclaim the money that was deducted at the source.
Eligibility in Loan Application
Regular ITR filing demonstrates consistent income and demonstrates that the individual has been paying taxes on time. To approve loans and other credit lines including overdrafts, bank credit cards, cash credits, and bill discounting options, financial institutions look for the previous year ITR’s of the applicant. Your home loan application may be refused if you are unable to present any documentation including ITR that the lender/ bank deems necessary.
Carry Forward Losses
To claim specified losses that might occur as a result of capital gains, a business, losses under Income from house property head, taxpayers must file a tax return on the due date. For instance, if you've made a profit on the sale of mutual funds or stock, you can offset it with losses from previous years by filing tax returns on time.
The bottom line is that unadjusted losses (with some exclusions) cannot be carried over to subsequent years if tax returns are not filed on time. As a result, a tax return will be required in order to ensure that the losses are carried forward and adjusted in the future.
Protection against Black Money
In recent years, the government has taken a number of steps to combat black money and limit money outflows from India. With this goal in mind, the government made the disclosure of foreign assets owned by taxpayers in their annual income tax returns in the fiscal year 2011-12 compulsory. Additionally, even if you don’t own foreign assets and you file your income tax return on time, your savings will never be considered black money by the IT department, as any income not reported to the department is considered black money.
For Startup Funding
Before funding your startup, financial institutions may demand to see your returns over the previous several years. These financial institutions and investors would want to study your business scalability, profitability and other cost parameters from your business income tax return to ensure that the investment they are making is going in the right hands. It also serves as verification that a person is a tax-paying citizen of the country.
Obtaining Government Tenders
Contractors can have a strong track record of procuring large projects in their field of business, whether it's a service or works contract, but if they don’t submit tax returns on time, or the returns aren't filed at all, they may face serious consequences and it can be detrimental for their business.
For contractors, these returns must not only be filed on time but also be extremely accurate and audited (if necessary). This is especially essential when you are trying to obtain a government tender. The tender scrutiny committee may inspect this work on occasion, and it is a common practice to check the ITR of the last five to seven years.
Buying Insurance with High Cover
Purchasing a life insurance policy for Rs 50 lakh or Rs 1 crore has become the norm. These days, if you acquire a term policy with a total insured of Rs 50 lakh or more, life insurance companies, especially LIC, ask for ITR receipts. This is because the amount insured by a term policy is determined by several criteria, one of which is the income of the insurer.
Growth of Nation
Filing tax returns can have a significant impact on a nation’s development. More money flowing into the country means more revenue for the government, which means more money to spend on improving the country's infrastructure. For instance, the government of India collected 9.45 lakh crore in direct taxes in Financial Year 2019. This money helped develop infrastructure and aided in several national development projects.
Credit Card Application
A credit card is a financial instrument that is sought after by almost every individual irrespective of the profession they are engaged in. An income tax return is one of the primary documents that one needs to furnish if there are problems in other income proofs. ITR also plays an essential role in determining a taxpayer's credit history through the Credit Information Bureau (India) Limited (CIBIL) score.
Most nations require ITR as one of the documents for issuing a Visa to an applicant. This gives the Visa processing officials information about your present financial situation and income. The embassy will verify the applicant's income and confirm that they are financially capable of covering the expenditures. Many foreign consulates want the last three years' income tax returns or the current year's income tax return. The absence of any kind of return can decrease your chances of acquiring a visa, especially if you're applying for a visiting, investor, or work permit. This is mandatory if you plan to travel to the United States, the United Kingdom, Canada, or Europe; South East Asia.
The filing of an ITR is a significant legal obligation imposed on taxpayers. Taxpayers must disclose their income and assets on the ITR and pay any required taxes within the deadlines. While there are numerous financial and non-financial benefits to submitting an ITR, such as easier access to loans, avoidance of interest and penalties, tax refund claims, and hassle-free visa processing, it is also the social obligation of every taxpayer.
If you have not filed your ITR yet, you must calculate your tax liability, pay any outstanding taxes for that year, and submit a written submission to your Assessing Officer.
Yes, there are a number of benefits of filing your income tax return on time, including fast visa processing, bank loan approval, tax refund, aid in getting government tenders, growth of the nation and carry forward of losses.
According to the Income Tax rules, you can carry forward losses to subsequent years if filing ITR before the due date. This will help you in reducing your tax liability from any future income.
It is better to file an income tax early to avoid any penalty.
The benefits of ITR are as follows: it would help you to claim the tax refund, This would help to process the quick loan, bank loan and secured loan, credit cards, etc.
Let Tax2Win experts file your belated return & claim your TDS