The rules & regulations pertaining to Income tax return filing in India are enumerated in the Income tax act, 1961. These rules are to be followed by every registered taxpayer who possesses a valid PAN card and files ITR in a financial year. ITR must be filed in a prescribed format and should be submitted with the Income tax department before the due date so as to avoid a penalty.
Gone are the days when it was a complicated process of online ITR filing but now with the advent of technology, the income tax department is continuously modifying the income tax return filing interface.
Different types of ITR forms which a taxpayer has to file & benefits associated with online ITR filing:
|ITR-1/Sahaj||Individuals having income from salary, House property & other sources Total income upto 50 lacs.|
|ITR-2||Individuals/HUF not carrying business or profession under proprietorship.|
|ITR-3||Individuals/HUF earning income from proprietorship|
|ITR-4/Sugam||Opting for Presumptive tax scheme|
|ITR-5||LLP, Firm, Trust, Co-operative society etc. Those covered under ITR-7 shall not fill this form.|
|ITR-6||Companies other than those claiming exemption under section 11 of Income tax act.|
|ITR-7||Requires to furnish details u/s 139 [4A, 4B, 4C, 4D, 4E] of Income tax act, 1961|
1.) Dodge the penalties & scrutiny by tax authorities
From FY 2018-19 & 2019-20; Rs 10,000 would be levied for non-filing of ITR. This penalty levy will always be there in your ITR filing record. To strengthen your ITR, one must avoid penalties and try to file Income tax return on or before due date.
2.) Improve your credit documentation process
Filing ITR will help you in your loan application; all major banks ask for a copy of Income Tax returns prior reviewing your application for a Car Loan, Personal Loan or Home Loan. For instance, the State Bank of India asks two-wheeler or four-wheeler loan applicants for documents like the latest salary slip that reflects all deductions, TDS certificate/Form 16, and copy of ITR for the last two financial years. Keeping a copy of your ITR receipt handy is a good idea if your loan application is rejected or if you’re getting a loan amount much lesser than what you had applied for. If you have a refund due from the Income Tax department, you will have to file returns in order to claim the refund.
3.) Compensate losses in the next financial years
Filing of the ITR is important as you cannot recompense your expenses & losses in the previous financial year to the current financial year. As per the income-tax provisions, if tax returns are not filed on time, unadjusted losses (with some exceptions) cannot be carried forward to future years.
4.) Processing of VISA
Foreign embassies, especially those of the US, UK, Canada or Europe, ask for your ITR receipts of the last couple of years at the time of the visa interview. Some may even ask for receipts of the last three years, while some others may ask for the most recent one. ITR receipts help them assess your income and indicate that you will be able to take care of the expenses on the trip. They also indicate that you’re someone who is not leaving the country for good but will return. Before undertaking travel to a certain country, check with the respective embassies on documents that you should carry on your foreign travel to that country-salary slip, Form 16, and ITR receipts. These requirements may vary from one consulate to another.
5.) Official document
Having an ITR receipt is important because form 16 is nothing less than an official document, entailing your income & tax charged there upon, along with revenue from other various sources. ITR receipt is sent to your registered address, which acts as a residential proof for the taxpayer. Therefore there are multiple uses of ITR filing viz. address proof, income proof & proof of income tax filing.
6.) Income tax refund
There are various instances in a financial year in which there has been tax deducted at source (TDS) on investment. So in order to claim TDS refund, one will have to file the ITR to claim refund of the same,”