To file Income Tax Return (ITR) is a vital aspect in every individual’s life once they start earning from a business or job. The first-time ITR filers are more nervous, as they are not really aware of the procedure and they are also worried about making mistakes. But it’s not that difficult. You simply need to select the online income tax payment option on the income tax India website and follow the given steps.
If you’re still wondering why it’s necessary to file the income tax returns, the following are the reasons to help you understand its importance:
- To file ITR is a sign of a responsible citizen
Indian government orders every Indian citizen who earns annual income to file a tax return within an already determined due date. This tax return is calculated on the basis of an individual’s income. A failure to pay tax will result in penalties from the Income Tax Department. People who earn less than the set income tax return level can voluntarily file for their ITR. It shows you are a responsible citizen and abide by all government rules and regulations.
- ITR is mandatory in some cases
In some cases, even if your annual income level is less than the qualifying ITR amount, you’re required to file the returns. In some Indian states, the registration of certain immovable properties needs some advancing to prove the property owner’s tax returns for the previous three years. ITR makes it easier for them to get the transaction registered.
- Your credit card or Loan Company may need to go through your return
If you’re planning to apply for any car or home loan, it is wise to maintain a steady record of filing your returns. This is because home loan companies do insist on seeing your returns. Similarly, even your credit card companies require the proof of income tax return before they issue a card.
- Return is necessary to claim any adjustment against your past losses
Filing ITR has many benefits and one of the advantages is that you can claim adjustments for any past losses, provided you regularly file the returns. Several losses incurred in a business or by an individual – whether a short-term or a long-term capital loss – can’t be given exemption if you don’t file proper returns. Therefore, the regular filing of ITR is important, as you never know when you would need a claim for adjusting against any of your past business or individual losses.
- Filing ITR is helpful during revised returns
In case, an individual has not filed the original return, he/she can opt for filing their revised return whenever they want to. According to the Income Tax Act, if a person doesn’t file returns, they have to bear the penalty of INR 5,000. Therefore, the voluntary activity of filing returns can be beneficial in preventing you from any legal implications.