Income Tax Return is a form that you have to submit to the Income Tax Department of the country. It has information on the person’s income and taxes that are to be paid during the year. Also, this needs to be for a specific financial year. But then, your income does not just mean your salary – there are different types of income, and they are:
- Salary
- Profit from a Business
- Profit from a Profession
- Income from Property
- Income from Capital Gains
- Income from Other Sources – Such as interest, royalty income, lottery, dividend, and more.
Also, while we are at it – you also have to know that there are types of income tax returns. The forms are ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7. Every form does serve a different purpose. You might be wondering what is really the benefit of filing your income tax – here it is.
What are the Perks of Filing your Income Tax?
Just by the way, there are tax benefits in Section 80CCC. 80C and more – there are benefits for just filing your Income tax returns, and you can read it all here.
1. You get an Easy Loan Approval
Filing the ITR will assist you with applying for vehicle loans, house loans, and much more. All of the big banks could ask for a copy of tax returns as proof of income statement. This is an essential document to get your loan approved easily.
2. It is an Address Proof
ITR can be utilized as proof of your income and address.
3. Claim Tax Refund
There would be instances when tax is deducted from your income even when the full taxable income is lesser than the primary exemption limit, and you will have no liability for the year. In this scenario, you will have to claim a TDS refund, for which you will have to file the Income Tax Return.
4. Faster Visa Processing
Most embassies and consultants need you to furnish copies of your tax returns for the past couple of years at the time of the visa application, and these are among the most required documents.
5. Carry Forward of Losses
If you file the return by the actual due date – you will be eligible to carry over the losses to the upcoming years, which you can utilize to offset the future income. This says that you can deduct some losses from relevant income, which will help you to decrease your future income tax expense. This is not possible if the income tax return is filed.
6. Do Not Get a Penalty
When you were obligated to file your tax returns in respect of the Income Tax Act but you did not – the tax office has the authority to levy a penalty of up to 5,000 rupees.
7. Owning your Asset
Any individual who owns a foreign asset is required by law to file appropriate income tax filings. This rule also applies to any immovable property you may own, such as a bank account. A failure in complying with the rules could result in severe penalties and is also regarded as a significant economic offense.
Don’t you want to enjoy all of these benefits? It is always good to file your income tax returns.
As an added point, let us learn about the motives of the different ITR forms.
Different Forms and their Purposes
ITR-1: This is a form that needs to be filed when your total income is more than 50 lakhs from sources such as salary, one house property, lotteries, agriculture, and more.
ITR-2: This is a form that needs to be filed by individuals and HUFs that are not eligible to file ITR-1 and do not have income from profits and gains from business or other jobs.
ITR-3: In order to be filed, they need to have income from profits from a business or self-employed profession.
ITR-4: In order to file ITR-4, they need to be formed, who are residents and have an income of up to 50 lakhs.
Penalties
A taxpayer has to file the return of their income earned in a financial year of up to 31st July of the year, also remember – unless it is extended. The government gives its taxpaying citizens a four-month window to consolidate their income details and file the income returns every year – that starts from 1st April to 31st July for the previous year.
It would only take a couple of minutes to file your ITR – and this is more reasonable for giving no excuses to pay it. There are various consequences to not filing your ITR, which we think you should not have to deal with.
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Conclusion
Now you know the perks of filing your income returns at the right time. It is best you never miss out on thee dates and pay penalties, rather enjoy the benefits of doing it right. It is not all that difficult for you to start filing your ITR returns on the right date without missing it out – which is why you can never miss out on filing it.