A lot of individuals seem to think that filing tax returns is voluntary and therefore dismiss it as unnecessary and burdensome. As we will see, this is not a very healthy perspective on tax-filing.
We must understand that filing income tax returns is an annual activity and is the premise on which the government determines the amount and means of expenditure of the country’s overall economy; and therefore, ensure stability.
Furthermore, as per section 139(1) of Income Tax Act,1961, every person being a company or a firm; or being a person other than a company or a firm, if his total income is above the maximum amount which is not chargeable to income-tax, he will have to furnish a return of his income.
As income tax can be a significant portion of your income, it is very natural to think about the benefits of income tax and filing returns for the taxpayers.
Here are some of the benefits you should know about: –
Your ITR shows credibility your credibility to the bank to repay the loan. Getting loans become easier when you have your ITR.
- Carry forwarding the capital losses
To be able to bring either the long term or the short term losses forward to the adjusted against capital gains in the future, you must file your ITR. In case of Capital losses, you can carry it forward for the next 8 consecutive financial years, if you file your Income Tax returns regularly.
- Claim Tax Refunds
ITR would help you claim the refunds of the excess TDS deducted on your income and investments. It is compulsory to file ITR to seek refunds. If you have a refund due from Income Tax Department, you will have to file returns, without which you will have to forgo the refund
- Proof for the self employed
Self-employed individuals like partners of a firm, consultants, businessmen, freelancers and others do not get Form-16. ITR receipts become the most important financial document for them.
- International travels made easy
Embassies of developed countries like the United States, United Kingdom, Canada, and Australia ask for ITR receipts of the past years to process your visa application. Your Income Tax Return (ITR) serves as a proof for your financial soundness. ITR document helps in getting your VISA stamped.
- Applying for government tenders gets easy
If you want to apply for government tenders, you will be asked to furnish ITR receipts for the last five years
- Credit card application
Copies of ITR are also required as proof for processing credit card applications. When you apply for a credit card, banks will check how you fare when it comes to your finances. If you have filed your Income Tax returns regularly, it stands as proof that you have a regular income and have paid appropriate taxes on it. Filing your income tax returns on time helps you to improve your creditworthiness for future loans.
- Recording of high value transaction
High-value transactions such as purchase of property, buying a car, investing in mutual funds, etc., are reported to the income tax department. By filing ITR, one can report these transactions and subsidize the same as per one’s income. All high value transactions reported by third parties are visible in Form 26 AS.
- Nation building
Taxes is one of the primary sources of income for the government, the money collected in the ex-chequer is used for building infrastructure and other development activities. The government spends the collected money on defence, healthcare, infrastructure, education, and launching various schemes for the masses.