Filing Your Income Tax Returns so that you can focus on what’s important in life.
Income Tax Filing
Income Tax Filing Service By WinRich Professional Services Pvt Ltd
What is Income Tax Filing?
Income Tax Return (ITR) is a form a person with an income is supposed to submit to the Income Tax Department of India. It contains information about the person’s income and the taxes to be paid on it during the year. Information filed in ITR should pertain to a particular financial year, i.e. starting on 1st April and ending on 31st March of the next year. Income can be of various forms such as Income from salary, Profits and gains from business and profession, Income from house property, Income from capital gains, Income from other sources such as dividend, interest on deposits, royalty income, winning on lottery, etc. The Income Tax Department has prescribed 7 types of ITR forms – ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, ITR-7 and applicability of the form will depend on the nature and amount of income and the type of taxpayer.
What does Income Tax Filing cover?
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Benefits of Filing for Tax returns
Easy Loan Approval: Filing the ITR will help individuals, when they have to apply for a vehicle loan (2-wheeler or 4-wheeler), House Loan etc. All major banks can ask for a copy of tax returns.
Quick Visa Processing: Most embassies & consulates require you to furnish copies of your tax returns for the past couple of years at the time of the visa application.
Claim Tax Refund: If you have a refund due from the Income Tax Department, you will have to file an Income Tax Return to claim the refund.
Income & Address Proof: Income Tax Return can be used as a proof of your Income and Address.
Carry Forward Your Losses: if you file a return within the due date, you will be able to carry forward losses to subsequent years, which can be used to set off against income of subsequent years.
Avoid Penalty: If you are required to file your Tax returns but didn’t, then the tax officer deserves the right to impose a penalty of up to ₹5,000. This can be avoided by filing your tax returns.
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The Importance of Filing for Tax returns
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.
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.
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 nudging individuals to file returns regularly even when it’s voluntary.
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.
Filing returns may prove useful in case of revised returns
In case the assesse hasn’t filed the original return, he cannot subsequently file a revised return, even when he really needs to. Under the Income Tax Act, non-filing of returns can attract a penalty of Rs 5,000. So while filing returns is a voluntary activity, there are times when it could hold legal implications for those who do not do so, especially if they must file a revised return in future.
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