Why Everyone Should Be Paying Attention To The Benefits Of Filing ITR?

Filing ITR, or Income Tax Returns, is an important part of keeping your finances in order. Not only does it help you stay on the right side of tax law, but it can also offer a range of money-saving opportunities – from tax credits and deductions to refunds and corrections.

Understand the Basics of Filing ITR.

Filing ITR is the first step to understanding the different money-saving opportunities available to you. It’s important to understand the basics of filing ITR in order to get the most out of your taxes and maximize potential refunds or deductions. Be sure to research any tax credits and deductions that may be applicable to your tax situation before filing so that you can take advantage of them on your return.

Is it necessary to filing ITR?

In India, it is necessary to file an income tax return (ITR) if you meet any of the following conditions:

Your total income exceeds the maximum amount that is not taxable.
You have received income from a source other than salary (such as rental income, business income, or capital gains).
You have received a refund of tax deducted at source (TDS).
You have claimed a refund of taxes paid.
You are required to file a return under any law (such as the Companies Act, 2013).
You are required to file a return under any other provision of the Income Tax Act (such as if you are a director in a company).

It is also important to note that if you are an individual or a Hindu Undivided Family (HUF) and your total income exceeds the maximum amount that is not taxable, you are required to file an ITR even if you do not have any tax liability (that is, even if your total tax is zero).

In addition to the above, there are certain other situations in which it may be advisable to file an ITR even if it is not mandatory. For example, if you have received a refund of TDS but have not received the corresponding income, you may want to file an ITR to claim the refund. Similarly, if you have received any income that is not taxed at the source (such as interest income), you may want to file an ITR to pay tax on that income.

When is the due date for filing ITR?

The due date for filing ITR in India depends on the type of tax return you are required to file and your tax assessment year. The tax assessment year is the financial year for which you are filing the return.

For individuals and Hindu Undivided Families (HUFs), the due date for filing an ITR is typically July 31 of the assessment year. For example, the due date for filing ITR for the financial year 2020-21 (assessment year 2021-22) is July 31, 2021.

However, there are some exceptions to this rule. For example, if you are required to get your accounts audited, the due date for filing an ITR is 30 days after the date of the audit report, or September 30 of the assessment year, whichever is later.

It is important to note that the due date for filing ITR may be different if you are a company, a firm, or a trust. It is also important to note that the due date for filing an ITR may be extended by the government in certain circumstances, such as in the case of a natural disaster or a pandemic.

If you are unable to filing ITR by the due date, you can file a belated return within a certain period of time. However, there may be penalties for filing a belated return.

ITR filing benefits?

Filing an income tax return (ITR) has several benefits:

Compliance with the law: Filing an ITR is mandatory if you are earning above a certain income threshold. Non-compliance can result in fines and penalties.
Claiming tax deductions and credits: Filing an ITR allows you to claim tax deductions and credits that you are eligible for, which can help reduce your tax liability.
Getting a refund: If you have paid more tax than you were required to, you may be eligible for a refund. Filing an ITR allows you to claim this refund.
Building a credit history: Filing an ITR regularly can help build a good credit history, which can be useful when you need to borrow money or apply for loans in the future.
Obtaining a loan or visa: In some cases, banks and other financial institutions may require you to provide evidence of your income, such as an ITR, in order to approve a loan or credit card application. Similarly, some countries may require you to provide evidence of your income, such as an ITR, when applying for a visa.
Planning for the future: Filing an ITR allows you to get a better understanding of your financial situation and helps you plan for the future. It also helps you keep track of your income and expenses and ensures that you are paying the correct amount of tax.

Benefits of filing ITR if not in the bracket

Even if you are not in the tax bracket, there may be several benefits to filing ITR.

Claiming a refund: If you have paid more tax than you were required to, you may be eligible for a refund. Filing an ITR allows you to claim this refund.
Building a credit history: Filing an ITR regularly can help build a good credit history, which can be useful when you need to borrow money or apply for loans in the future.
Obtaining a loan or visa: In some cases, banks and other financial institutions may require you to provide evidence of your income, such as an ITR, in order to approve a loan or credit card application. Similarly, some countries may require you to provide evidence of your income, such as an ITR, when applying for a visa.
Planning for the future: Filing an ITR allows you to get a better understanding of your financial situation and helps you plan for the future. It also helps you keep track of your income and expenses and ensures that you are paying the correct amount of tax.

In addition, filing an ITR is mandatory if you are earning above a certain income threshold. Non-compliance can result in fines and penalties. Therefore, even if you are not in the tax bracket, it is important to file an ITR if you are required to do so.

Benefits of filing ITR for deceased individuals

Filing an income tax return (ITR) for a deceased individual can have several benefits:

Completing the legal process: Filing ITR for a deceased individual is a necessary step in the legal process of settling their estate. It is important to file the ITR in a timely manner to avoid any delays or issues with the settlement of the estate.
Claiming a refund: If the deceased individual has paid more tax than they were required to, their estate may be eligible for a refund. Filing an ITR allows the estate to claim this refund.
Obtaining a loan or visa: In some cases, banks and other financial institutions may require evidence of the deceased individual’s income, such as an ITR, in order to approve a loan or credit card application. Similarly, some countries may require evidence of the deceased individual’s income, such as an ITR, when issuing a visa.
Planning for the future: Filing ITR allows the estate to get a better understanding of the deceased individual’s financial situation and helps with the planning for the future. It also helps the estate keep track of the deceased individual’s income and expenses and ensures that the correct amount of tax was paid.

It is important to note that only the legal representative of the deceased individual’s estate (such as an executor or administrator) is authorized to file an ITR for the deceased individual. The legal representative is responsible for ensuring that the ITR is filed in a timely manner and that all necessary documents and information are provided.

Consequences of not filing ITR

If you are required to file an income tax return (ITR) but fail to do so, there can be several consequences:

Fines and penalties: Non-compliance with the requirement to filing ITR can result in fines and penalties. The amount of the fine or penalty may depend on the circumstances of the case and the amount of tax owed.
Interest on unpaid taxes: If you owe taxes and fail to pay them by the due date, you may be charged interest on the unpaid amount.
Loss of certain benefits: If you are eligible for certain benefits, such as a tax deduction or credit, and you fail to file an ITR, you may lose your eligibility for those benefits.
Difficulty obtaining a loan or visa: In some cases, banks and other financial institutions may require you to provide evidence of your income, such as an ITR, in order to approve a loan or credit card application. Similarly, some countries may require you to provide evidence of your income, such as an ITR, when applying for a visa. If you have not filed an ITR, you may have difficulty obtaining these loans or visas.
Inability to claim a refund: If you have paid more tax than you were required to, you may be eligible for a refund. Failing to file an ITR may prevent you from claiming this refund.

It is important to note that the consequences of not filing an ITR may vary depending on the circumstances of the case and the laws of the country in which you are required to file an ITR.

CONCLUSION

In conclusion, filing an income tax return (ITR) is important for compliance with the law, claiming tax deductions and credits, obtaining a refund, building a credit history, and obtaining a loan or visa. Filing an ITR is also important for planning for the future and keeping track of your income and expenses. Failure to file an ITR can result in fines, penalties, interest on unpaid taxes, loss of certain benefits, difficulty obtaining a loan or visa, and an inability to claim a refund. It is important to understand your obligations and to file an ITR in a timely manner to avoid any consequences.

FAQs

Here are some frequently asked questions about income tax returns (ITR):

What is an ITR? An ITR is a form that individuals and businesses use to report their income and calculate their tax liability.
Who is required to file an ITR? In India, individuals and Hindu Undivided Families (HUFs) are required to file an ITR if their total income exceeds the maximum amount that is not taxable. Companies, firms, and trusts may also be required to file an ITR depending on their circumstances.
What is the due date for filing an ITR? The due date for filing an ITR in India is typically July 31 of the assessment year for individuals and HUFs. However, there are some exceptions to this rule, such as if you are required to get your accounts audited. The due date may be different for companies, firms, and trusts.
Can I file an ITR after the due date? Yes, you can file an ITR after the due date, but it will be considered a belated return. There may be penalties for filing a belated return.
What happens if I don’t file an ITR? If you are required to file an ITR but fail to do so, you may be subject to fines, penalties, interest on unpaid taxes, loss of certain benefits, difficulty obtaining a loan or visa, and an inability to claim a refund. Non-compliance with the requirement to file an ITR can also result in legal consequences.
Can I file an ITR online? Yes, you can file an ITR online in India using the e-filing portal of the Income Tax Department. You can also file an ITR using a tax preparation software or by visiting a tax professional.