Benefits of Filling Income Tax Return | Tech Vigya

Income tax is an essential component of the revenue of any country. It is a tax that is levied on the income earned by individuals or organizations within the territorial boundaries of the country. In India, income tax is levied by the Central Government under the Income Tax Act, of 1961.Income tax return filing is an annual exercise undertaken by every taxpayer in the country. The deadline for filing income tax returns is July 31st for individuals and September 30th for businesses. In this article, we will discuss the benefits of filing income tax returns.

Compliance with the Law

The first and foremost benefit of filing income tax returns is that it helps you comply with the law. Every individual who earns income above the specified limit is obligated to file income tax returns. Failing to do so can result in legal consequences such as penalties, fines, and even imprisonment. By filing your income tax returns, you are complying with the law and avoiding any legal repercussions.

Claim Refunds

One of the benefits of filing income tax returns is that you can claim refunds on the tax you have paid if you are eligible. Refunds arise when you have paid more tax than you are obligated to. Filing income tax returns allows you to claim the excess amount paid, and you can receive the refund in your bank account. This process can take up to a few months, but it is worth it if you are eligible for a refund.

Easy Loan Processing

If you are looking to apply for a loan, having a track record of filing income tax returns can make the process much easier. Lenders often require you to submit your income tax returns for the past few years as proof of your income. By filing your income tax returns annually, you are creating a strong financial record that can make it easier for you to get loans in the future.

Proof of Income

Filing income tax returns serves as proof of your income. This can come in handy in various situations such as applying for a visa, getting a loan, or buying insurance. By having a documented record of your income, you can avoid any discrepancies and provide proof of your financial standing.

Avoid Scrutiny

Filing income tax returns can help you avoid scrutiny from the tax authorities. The Income Tax Department in India has been using technology to keep a close eye on taxpayers' financial activities. By filing your income tax returns annually, you are showing that you are a responsible taxpayer who is following the law. This can reduce the chances of the tax authorities scrutinizing your financial activities.

Lower Interest on Late Payment

If you fail to pay your taxes on time, you are liable to pay interest on the amount due. By filing your income tax returns on time, you can avoid the interest charges that come with late payments. Even if you cannot pay the entire amount due, filing your income tax returns can reduce the interest you have to pay on the outstanding amount.

Carry Forward Losses

If you have incurred losses in a financial year, you can carry them forward and set them off against your income in the future. However, to carry forward losses, you need to file your income tax returns within the specified deadline. By filing your income tax returns on time, you can ensure that you do not miss out on this benefit.

Conclusion

Filing income tax returns is not only a legal obligation but also a beneficial exercise. It can help you comply with the law, claim refunds, make loan processing easier, serve as proof of income, avoid scrutiny, reduce interest charges, and carry forward losses. Therefore, it is essential to file your income tax returns on time every year.