Sunday, February 12, 2017

Is Filing Income Tax Return (ITR) Mandatory?

Many people are still in confusion whether they have to file Income Tax Return or not.

Some thinks that if any individual income is below five lakh rupees then filing ITR is not compulsory. This is totally wrong. Here is the detailed analysis which clarifies all your doubts.

"Any individual living in India is required by law to file Income Tax Returns, if the total income without allowing deductions (such as Section 80C etc) exceeds the basic exemption limit."

If you don't know the tax exemption limit for the current financial year, then at first check what is the limit. If income is above the limit you have to file ITR. For instance for the financial year 2017-18 the limit is Rs.2,50,000. The limit varies from year to year. Also senior citizens enjoy somewhat more upper limit.

Suppose if you earn Rs.2,80,000/- and even though if you manage to invest some amount around Rs.40000/- under Section 80C in LIC or NSC or Fixed Deposit scheme. Then the remaining amount becomes Rs.2,40,000/-. Don't think that since this amount does not comes under taxable limit, you doesn't need to file Income Tax Return. You have to file ITR compulsory because total income without deductions exceeds basic exemption limit. Of course you don't need to pay any tax if you claim deductions under Section 80C. Hope this is clear.

Some times even though if your income is less than basic exemption limit, you may require to file return if you want to claim refunds. This may happen in different ways. Assume your bank has deducted TDS on your fixed deposit because you got some interest more than Rs.10000/- in a financial year. Actually your income is low. One way to escape from this is by submitting Form 15G to the bank when you open FD. Otherwise you have to file ITR so that you can get back the deducted amount. Hope this is also clear.

Benefits of Filing ITR

ITR is considered a customary income proof not only in India but also worldwide. If you are looking for higher education or employment abroad, ITR is the largely accepted as income proof.

Apart from a good credit history (or past repayment track), the fact that you are filing your ITR regularly gives you speedier access to credit and at better terms. Getting a educational, home and other type of loan will be a lot easier if you are filing IT returns regularly.

ITR also provides the impression to the financier that you are a law abiding citizen and will repay the loan with in the deadline.

The acknowledgment for filing the tax returns would come in handy in case a visa is required to be obtained. The document would serve as proof of the financial soundness of the individual person.

Registration of immovable properties in most states requires one to produce tax returns for the last three years.

Filing ITR doesn't always about paying tax. It can be used as a means to reduce your tax liability. For instance, salaried employees for whom TDS has been cut during the financial year can claim refund if the tax outgo has been more than the actual tax payable.

Consequences of not filing ITR

If you don't file IT Return, obviously you cannot file revised return if needed at a later stage.

Non filing of returns may attract a penalty from income tax department along with interest tax if applicable.

While filing return is a voluntary activity, there are legal provisions against those who do not file ITR.

Many people still avoid filing IT return because they think that no one is going to notice them. But this is not a fair deal. Nowadays online transaction activity has grown to such an extent that every thing can get tracked via PAN and Aadhaar. Also banks demand PAN while opening account. If some thing is suspicious it can be easily tracked by IT department. Even if a person is not eligible for taxes under current laws, it is wise to file returns for the same and be on the right side of the law.

As a citizen of India, it is out duty to pay tax on time and file IT return. This is the social responsibility of every Indian. Actually filing income tax return became a lot easier now. You can file IT return online via official government site free of cost with in a matter of minutes. The dead line for filing returns for the current financial year ending 31st March is 31st July.

To get more details regarding Income tax rules, form downloads and e-filing do visit the official site

No comments:

Post a Comment