What's an advantage of filing a tax return, and why is it essential?by Nisha Sharma SEO Executive
If you earn income above the tax limit, you are liable to pay income tax in India as per the Income Tax Act, 1961. However, if you fail to pay tax on time, you will be required to pay the penalty. In some situations, it could also result in prosecution.
What is an income tax return?
Income tax return means a form in which an individual is required to submit his income data earned that financial year and submit it to the income tax department. It includes all the information about the tax required to pay during the year.
Who is required to file an income tax return?
According to the income tax law, the return must be filed if an individual's gross total income exceeds the basic exemption limit. However, if an individual chooses the new concession personal tax regime, the basic exemption limit is 2.5 lakh irrespective of age.
Benefits of Filing Income tax return:
The income tax is an essential portion of your income, so it is natural to consider tax benefits and filing returns for the taxpayers.
1. Loan processing:
Besides helping the nation, there are also other benefits of the income tax return. If you want to purchase a home and apply for a loan, you will ask to submit your income proof, such as an income tax return. Probably you are required to submit the last three years of returns. Loan processing becomes comparatively easy with income tax proof.
2. Claim tax deductions:
The most significant benefit of an income tax return is you can avail the benefits of deductions. There are multiple ways to reduce your overall tax liability.
A tax collected from the people is the primary source of income for the government. The money collected is used to create hospitals, schools, buildings, and other development activities that ultimately enhance the nation's growth.
4. Address proof:
The other benefit of income tax is that tax assessment documents work as address proof, especially when you live outside India. Various documents such as visa application, Aadhar card, license, and passport are required to submit as address proof.
Why is income tax return filing important?
Many individuals assume that filling in tax returns is voluntary and ignore it as unnecessary work. Filing tax returns is an annual activity and is the moral responsibility of each citizen of the country. It is also important because:
- ITR filing is a sign of responsible citizen:
As per the government, an individual must file a tax return who earns a specified annual income. Filing your return is a sign that you are a responsible person.
2. ITR is Compulsory in Some Cases:
Even if your income does not fall into the limit but is excellent, you still file the voluntary return. In various states, registration of the immovable property is needed as advance proof of filing the return.
In UAE, people are still ignorant of ITR filing due to its tedious process and complicated laws. However, companies like Alankit help Indians living in the UAE with the easy filing of tax returns. Get in touch with their experts here.
Created on Sep 29th 2021 02:39. Viewed 200 times.