Have you filed your income Tax?
Most millennials think that if their salaries fall below the taxable bracket they shouldn’t be filing ITR (Income Tax Returns). However, that is not true. One needs to file an income tax return the time they enter a job and start earning even if your income falls below the basic exemption limit.
Filing tax returns is an annual activity seen as a moral and social duty of every responsible citizen of the country. It is the basis for the government to determine the amount and means of expenditure of the citizens and provides a platform for the assessee to claim a refund, among other forms of relief from time to time. Apart from filing, there are various benefits to file income tax.
“The hardest thing in the world to understand is the income tax.”– Albert Einstein
Here are 10 reasons why you need to file Income Tax?
1. Visa Processing.
If you are travelling overseas or planning to travel in the near future, proof of earning is required. If you are salaried than employer certificate will work but if you are self-employed than income details are needed to be submitted. So, ITR return will work as income-earning proof.
2. Ease of loan processing.
its a dream of Millennials and many others to have their home or property, but you require 2-3 years continuous filling of ITR as a mandatory document. A lot of people who have not filed ITR on time rush at the last minute for these documents to their CA, so why not better file it on time?
Note: Now backdated filling is not possible due to the online process of filing ITR.
No two filling date should be of the same date to process the loan file.
3. Income proof of earnings every year.
If you are self-employed or freelancer you try to skip filing ITR. If someone has not filed the ITR over the years, it will be a lengthy and tiresome process to explain the sources of earnings over the years. However, with ITR it will be legal proof of income earned in each year.
4. Claim back TDS. (If applicable)
You might get TDS (Tax Deducted at Source ) certificate from your employer, FD interest payment, Commission payment etc every year. But if you do not file your ITR you can not claim back your deducted amount as Tax Refund.
5. Claiming Tax Refund.
Salaried people have to submit Tax Saving proof like 80-C 80- D, ELSS etc every year before January 30, In case you forget to submit or miss the deadline than higher TDS would be deducted in Form 16. No need to worry still you can claim TAX REFUND by filling ITR before the due date.
6. Higher Insurance Cover
When you buy high Insurance cover like more than 1 cr or above you require to submit income proof so that insurance company can calculate eligible life cover for you.
Or it might happen that you don’t get salary receipt or your monthly income is being paid from different groups in that case bank statement will also not work as strong proof. So, better to have an ITR return filed. Minimum 3-year ITR is required.
7. Carry Forward of Loss.
If you made any loss then that loss can be carried forward in the next financial year, but before that, you need to file ITR before the due date. You cannot stay away from the filing of your return saying you have an income below the exemption limit as you have made a loss.
8. Insurance Claim.
If you have met with an accident and got disabled /death, to establish income proof ITR is the valid document and if you are self-employed than ITR is a must.
They require it to make claim compensation as per the Motor Vehicle Act.
9. Proof of Address
You can use ITR for passport application or renewal too as valid proof of address.
10. Credit Card Application
Certain bank requires ITR return to give credit limit and process the credit card application.
Bonus
11. Avoid Extra Interest and Penalties.
If you do not file ITR on time you would be liable to pay 1% interest on taxable income per month and apart from the interest you would also need to pay penalties for late return filling.
12. Lifesaver For Self-Employed and Freelancer
Keep this in mind future Freelance and independent professionals. Freelancer and self-employed do not receive Form 16 like a salaried person. Filling ITR is the only document they have as proof of income and without this, they can face funding issues and other regulatory hurdles.
I hope you have got clarity on why you should file an income tax return even if you have to file a Nil return it has several other benefits as mentioned above. Income tax returns can be used as proof for various proceedings. Tell your friends you know who do not file income tax or avoid paying tax
PS: Avoid hiding your real income as some benefits are linked to ITR income like insurance eligibility, loan eligibility etc. Lower you show lower benefits you get Choice is Yours.
