July 31, 2019 is the last date for filing Income Tax returns and millions of us are gearing up for the same.
However, it might come as a surprise, but a lot of individuals seem to think that filing tax returns is voluntary and in fact dismiss it as an unnecessary burdensome activity. But, we must understand that filing income tax returns is an annual activity and at the same time it’s a moral and social duty of any responsible citizen. It is the basis on which the government determines the amount and means of expenditure of the country’s overall economy; and therefore, ensure stability.
There are several reasons why you should file your income tax returns. We take a look at some of the reasons why is it important to indulge on this exercise without fail.
According to Income Tax laws, individuals who earn a specified amount of money every year, are required to file a tax return within a due date. If you fail to do so, you will be penalised. 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. Commenting on the benefit of filing income tax, Suneel Dasari, CEO, EZtax.in, said, “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.”
The Income Tax Act allows a taxpayer to claim multiple 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 Tax Deducted at Source (TDS), gets subtracted 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 tax amount deducted. You can claim 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,” confirmed 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 would ask to see your IT returns for the last few years before approving your 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 creditworthiness for future loans,” Dasari further added.
Being regular with your IT returns filing comes in handy when you are planning an international trip. 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. Also, if you are planning to visit countries like USA, Canada or even Europe, IT Return filing is in fact, essential.
In the end, it can be said that, whether you fall under the tax bracket or not, whether your annual income is Rs. 4 lakh or Rs. 40 lakh, you must file for Income Tax Returns every year. Needless to say, that being on the right side of the law definitely helps for the better.