As stated by the provisions of Income Tax Act 1961, it is important for people, with annual income more than 3 lakh, to file income tax. Furthermore, filing of Income Tax Return (ITR) is essential for residents owning assets overseas. Although, if person’s income is not taxable, still he/she can avail following benefits after filing income tax returns. Here are some of the Benefits of filling income tax:
Residence Proof: You can use your tax assessment order as a proof of residence while applying for Aadhaar card, passport or any other document.
Easy loan processing: Usually, if you apply for a loan from any banking institution, you are required to present income tax returns of last three years. The loan can be of any sort, including housing loan, education or automobile loan from the bank.
To sustain losses: In case you fail to file returns, you will not be able to prolong capital losses, whether short-term or long-term, in a financial year to be attuned against capital gains made in the following years.
Recording of high-value transactions: If a person makes any high-value transactions, including purchase of property, buying a car, investing in mutual funds, etc., he/she has to report to the income tax department. Therefore, by filing income tax returns, the person can state these transactions & validate the same as per one’s earnings.
Refund of TDS: If a person gets TDS deducted from his income, then he can easily file income tax return to claim TDS later.
Keep away from paying penalties: At least Rs 10,000 would be charged for not paying the income tax return to the government. Also, apart from the taxes and interest, there could be set fines ranging from 50 to 200 per cent in some cases.
Finance experts assert that if one plans to set up a business and needs to apply for a government tender, he/she will need to present their tax return receipts of the preceding five years. Also, is to demonstrate your financial status and whether you can carry the payment commitment or not.