July 31 is the last date for filing Income Tax returns. There are several reasons why you should file your income tax returns, and avoiding a reminder notice from the Income Tax department is just one of them.
Let’s take a look at some of the important reasons for filing your Income Tax returns.
According to Income Tax laws, individuals who earn a specified amount of income every year are required to file a tax return within a due date. If you fail to file IT returns and to pay tax to the government you have to pay late fees and penalties. Individuals who earn an income less than the specified limit may also file returns even if it is not mandatory. Filing your returns is a sign that you are a responsible citizen. “ File income tax returns on time and be a good citizen, contribute to India’s growth, and get peace of mind for you and your family,” says Suneel Dasari, CEO, EZtax.in..
The Income Tax Act allows a taxpayer to claim several deductions under several sections to reduce one’s tax outgo. However, to claim these deductions under various sections of the Income Tax Act it is important to file your Income Tax returns every year by the due date.
In many cases when TDS gets deducted on your income you are eligible for refund from the Income Tax department if the total taxes you are eligible to pay is less than the taxes deducted. You can claim tax refunds only if you file income tax returns by the due date. “ Filing your income tax returns helps you get back refunds on your excess tax payments,” says Dasari.
If you invest in equities, you will most likely incur capital gains and losses. According to the Income Tax laws, capital losses can be adjusted against capital gains. But for that filing income tax returns is mandatory. Also, if you have any capital loss, you can carry it forward for the next 8 consecutive financial years, if you file your Income Tax returns regularly.
When you apply for a loan or 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. Financial institutions like banks would ask to see your IT returns for the last few years before giving you a home loan, a car loan or a credit card. Insurance companies may also ask for IT receipts when you are buying term insurance of a higher amount. “Filing your income tax returns on time helps you to improve your credit worthiness for future loans,” says Dasari.
If you are travelling abroad and applying for a Visa, the foreign consulate would require proof of your income, if you are not visiting someone who acts as your sponsor. You will be asked for Income Tax receipts for a certain period. If you are planning to travel to USA, Canada, Europe and Great Britain, this becomes extremely important.