In this article we will discuss about
benefits of filing itr and Who is required to do compulsory filing of ITR?
In following cases filing of ITR is mandatory.Thus in following case compulsory filing of ITR id required.
Compulsory filing of ITR
- As per income tax act exemption limit for a normal taxpayer is Rs.2,50,000, For senior citizen it is Rs.3,00,000, and for super senior citizen it is Rs.5,00,000. ITR filing is mandatory if income exceeds basic exemption limit as said above.
- Individual having ownership of assets outside India and income is also accruing from the same.
- Any person who is paying more than Rs.1,00,000 for electricity in a financial year.
- Any person depositing more than Rs.1,00,00,000 in one or more bank accounts should file ITR.
- One should also file income tax return if he or she spends Rs.2,00,000 or more on foreign travel during a fiscal year.
Benefits of filing ITR even if it is not required for compulsory filing of ITR as above.
Benefits of Filing ITR
- Serves as proof of income:Income tax return serves as proof of income and hence one need not prove source of income by providing proper bifurcation of income and expenses. Unlike salaried who gets form 16 and hence has already proof of income, but for self-employed income tax return serves as proof income.
- Avoiding heavy penalty: By filing income tax return timely one can avoid penalty. In case of non-filing of timely ITR penalty up to Rs. 10,000 can be imposed by tax officer in case you are required to file your itr compulsory.In case it results in compulsory filing afterwards than heavy interest can be levied later on the tax payable.
- Losses cannot be carried forward: Belated filing of income
tax returns does not allow carry forward of losses under income from profit and gains from business, other income and income from capital gains. Filing of ITR also helps to keep track of losses to be carried forward and set off against profit.
- Income tax refund:If one has paid more tax than required than it results in income tax refund along with interest. Thus timely filing of income tax return helps in claiming income tax refund along with interest. Thus if one has made tax saving investment and
paid more taxes than required one can get income tax refund.
- Visa Application: If one is willing to travel foreign for
any purpose including business visit or study abroad than embassies ask for income tax returns to endure that applicants are tax compliant. In case of countries like US,UK and Canada it is more particularly observed that they seek tax complaint records for easy processing of VISA.
- Seamless Loan processing: For loan application processing banks ask for ITR for at least two years to support as income proof for loan. Besides applying for loan it also helps in applying for credit cards and insurance policies.
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