The Income Tax Department mandates everyone to file income tax return if one’s gross total income (before allowing deductions under section 80C to 80U) exceeds Rs 250,000 in a financial year. This limit is Rs 300,000 for senior citizens (more than 60 years old, but less than 80 years old) and Rs 500,000 for super-senior citizens (more than 80 years old). However, you can file your return involuntarily even if your income is less than the maximum exemption limit.
Here, are six reasons why you should file your income tax return on time.
1 ) Carry forward of loss
The various losses incurred by an individual or a firm in terms of business losses (both speculative and non-speculative) or capital losses (both short-term as well as long-term) cannot be shown as an exemption to carry forward the losses of the previous year. However, one can claim this benefit only if one has filed one’s income tax return.
2) Income tax refund
Filing tax returns is not merely done to fulfil the moral and social obligation by every citizen of the nation. If you want to claim an income tax refund, filing of income tax return becomes mandatory.
3) Avoidance of penalty
Under section 234F of the Income-Tax Act, if a person required to furnish a return of income by July 31 fails to do so, then a fee of Rs 5000 shall be levied if the return is furnished before 31st December. However, the fee shall be Rs 10,000 if it is filed after 31st December. Moreover, if the total income of the person doesn’t exceed Rs 5 lakh, then fee payable shall not exceed Rs 1000.
4) Legal sanction to your income
The assessees whose incomes are required to be audited as per provisions of the IT Act, the date of filing the return is generally 30th September. Filling a return gives a legal sanction to your income even if you are not liable to pay taxes for the year.
5) Advantages in the processing of a loan
Banks and other non-banking financial institutions require your income tax returns to process home, educational and other types of loans. It is also mandatory to have income tax returns for the processing of any visa. Also, some credit card companies demand proof of tax returns before issuing a card.
6) Registration of immovable property
Some states require your income-tax return of the last three years for registration of immovable property. Also, a legal sanction to income whether taxable or not helps you pad up subsequently to account for the wealth or the property owned.
Filing income tax return doesn’t only make you a responsible citizen but it also ensures smooth governance. Also, it saves you the gargantuan hassles if you are ever required to furnish the return under a show-cause notice from the I-T department.