A Few Words
Income Tax Return
Understanding Income Tax Returns in India
Know About it
It is simply a form to be filed with the Income Tax Department. A Form to be filed as a statement of income earned. It is arranged in such a way that calculating tax liability, scheduling tax payments, or requesting refunds for the over payment of taxes has been made convenient for the taxpayers. They must, first, determine the type of Income Tax Return (ITR) Form they need to fill before actually filing their Returns. Which Form is to be filled, depends on the income that the taxpayer earns. Its purpose is to report our income and taxes paid thereon to the government.
Benefits of Filing Income Tax Returns
Processing of Loans & Visa: If you apply for any loans such as a home loan, car loan, etc., the eligibility and quantum of loan would depend on your income. This can be established through filed ITRs. ITR will help your lender to assess your repayment capacity.
If you plan to travel overseas, proof of earning is required. If you are salaried then a certificate from the employer will work. But if you are self-employed then income proof & details need to be submitted.
Claiming Refund: Many salaried individuals don’t file ITR as they think that the tax on their income has already been deducted and they have Form 16. But your employer may have paid more tax on your behalf. Not taking into consideration your actual house rent, children’s school fees, tax-saving investments, or insurances. So, the filing of ITR will enable you to get a refund from the IT department.
There could be some TDS cut on some investment or you may have paid excess tax on your income that can be claimed only by filing the ITR.
- Carry-forward Losses: As per Income tax rules, losses are allowed to be carried forward and set off against capital gains. But this applies only to those individuals who file ITR in the relevant assessment year. If you have incurred losses for a year and you have earned below the exemption limit. You must file your returns to be able to carry forward the losses you have incurred. And it gets balanced against future gains and income.
The capital losses can be carried forward for 8 consecutive years, as per the IT Act.
- Establishing Income in Compensation Cases: Although the Motor Vehicles Act does not make it compulsory to present the ITR while calculating the compensation in case of accidental death or disability, the procedures approved by Delhi High Court mention the need for ITR for self-employed persons.
This helps to establish the income of the person to arrive at appropriate compensation.
- Being a Responsible Citizen: Staying on the right side of law helps. Similarly, keeping the income tax department informed about your income and taxability helps too. This is only possible when you file your ITR. Those who earn less than the prescribed slab of income can file returns voluntarily. Filing returns are a sign that you are a responsible taxpayer.
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