In the game of life, your success is often calculated in figures; the numbers in your savings account and the yearly profits as expressed in your income tax return. These numbers can either unlock doors, build openings for advancement and growth, or shut doors. Company owners and professionals may have the ability to knock more often when filing their yearly income tax return. The filing of an income tax return is not only for the purposes of reporting your earnings to the Income Tax Authorities and paying taxes owed but helps you in various ways, both in short term and long term. As the ITR filing date has been extended to 31st December ’20, make sure to file your ITR to enjoy the following benefits of filing returns on time!
- Carry forward of losses : Unadjusted losses (with some exceptions) cannot be carried forward to future years unless one’s ITR is filed. If one files return before the due date, it enables to carry forward the losses to subsequent years, which can be used to set off against income of subsequent years.
- Used as address proof : Since ITR receipt is sent to the registered address, so it serves as an address proof. Thus, it can be used to apply for a bank account or a personal loan
- Quick Visa processing : One should be aware that while applying for Visa, most embassies and consulates ask for a copy of tax returns for the past couple of years. Hence to avoid last minute hassles, file ITR timely.
- Makes Bank loan documentation easier : If you plan on applying for an auto/home/personal loan, keep your ITR ready! All major banks ask for tax returns filed for the last 2-3 years to assess an individual’s ability to repay the loan.
- Claim Tax Refund : Any excess amount paid to the government is reimbursed in the form of Income tax refund. To avail income tax refunds from the income tax department, one needs to file an ITR to claim the same.
- To avoid Penalties : If one falls under the tax brackets, but has not filed the ITR then one should get ready to pay the penalties for not complying! File your ITR on the due date to avoid penalties (maximum penalty is Rs 10,000).
Filing of return is also mandatory to avail the benefits of investments made under section 80 C and to avail exemption of eligible Long Term Capital Gains (LTCGs.)
It is always recommended to file ITR even if the taxable income falls below the basic exemption threshold as it serves as a proof of income earned by an individual (Limit is Rs 2.5 lakhs for ordinary individuals, Rs 3 lakhs for senior citizens and Rs. 5 Lakhs for super senior citizens). Thus, filing your tax return dutifully every year can save a lot of efforts later for you.
Hence be ITR ready to reap the benefits!