Why you should file Income Tax Return? Benefits of Filing Income Tax Returns

Most of the individuals who are non-filer of Income Tax Return are scared of filing of return thinking income tax department will track them and later send notices which will create trouble for them. Let me tell you, this is the myth. Income tax department never harass genuine tax payers. Other reason for non-filing are, “my employer has deducted tax at source on the salary income received by me hence I don't need to file my income tax returns. The Lazy one says “The deadline for filing tax returns is far away, why bother now.” If everyone follows the law and file return on time it has many benefits which are highlighted as follows:

 

1) Building a Strong Balance sheet over 20-30 years create Financial History

We know a small newspaper vendor in Mumbai Suburbs selling newspapers and earning livelihood. That’s his only business and his income is not more than 2 to 3 lacs. He has not filed his income tax return, though he might have savings of more than 20 lakh in last 20 years. He suddenly deposited Rs 15 Lakh cash accumulated in Bank in one year. Later he just received notice from Income Tax department regarding High Value Transition entered without Filing returns. For him it was difficult task to convince Assessing officer that it is saving from his past 20 years income and in he has just made cash deposit in bank. Had he filed his income tax return regularly it would have been easy to prove the transaction.

Also imagine a Family of Six Individuals – if everyone has filed Income Tax Return for Last 20 years they may have accumulated income and Strong combined Balance sheet of more than 1 Crore. So even in case your income is below taxable limit you should always file so that your asset side is strong enough, in case you need to provide proof.

2) Easy Home, Vehicle and Car Loan at reasonable rate from Bank

Getting loan is easy if you have collateral assets like Property. However getting at reasonable rate is challenge. Bank always check repayment capacity of borrower even if he has good property collateral. You should have income from which you can repay loan, bank needs proof of your income. The proof cannot always be receipts or deposit in your bank account. For bank the best proof of your income is your Income Tax Returns. And so bank insist on them and usually do not provide loan without ITR documents

3) Getting Education Loan for Student / Concession Loan for Student from Trust

Trust which are formed to help deserving student to pursue higher studies by giving scholarship or sponsoring their studies always cross check that benefit is passed to deserving student whose parents are not able to afford higher studies. The Easy way for them is to check income tax returns of parents to determine their income and eligibility for loan. In such cases even if your income is below taxable limit you should file your income tax return

4) Missed Claiming your Refund or loss carried forward

There are cases where individual TDS has been deducted from Income from Interest or from salary or else, however it just skipped to file return and claim refund of Tax. Even in such cases where income is below taxable limit individual should file return and claim Refund. In case you have not claimed your refund for last 6 years you can file return and still claim. For more details read article Get Refund of Income Tax by Filing Refund Claim or Loss Carry forward for Last 6 years

5) Applying for VISA in case of Travel Abroad

We live globalization, were many employees are working with MNC. There are several opportunities to work abroad. Most of country VISA requirement mandates copy of Income Tax Return for past 2 to 3 years. Even in case you have to visit for business purpose or in case of tourism the host country will always check your financial status through your income tax return filed papers. So in case you are planning holiday abroad in next year do start filing your income tax returns

6) Accidental Claim in Third Party Insurance

This is the rare benefit, incase if your family member has accidental death for example in case of road accident or terror attack victim the court and insurance company always ask for proof of income to arrive at  the amount of claim. The Proof of Income which is best vaild in court is Income Tax Return. Basic formula applied by court is multiplying number of years of remaining life of deceased with average income in ITR of last 3 years.

7) Applying for Government Tender

Most of time selection body of the Government panel for tenders insist on particular threshold turnover. Your Income Tax return becomes basic proof which they demand for checking turnover reported in returns. The basically check the nature of business you are into for last 7 to 10 years. If you had file return showing your nature of business consistent it can be valid proof of your experience in that said business.

8) Buying a High Life Insurance Cover

Buying life cover of Rs 50 lakh or Rs 1 crore has become commonplace. However, these covers are available against your ITR documents to verify annual income.Life insurance companies, especially LIC, ask for ITR receipts these days if you opt to buy a term policy with sum insured of Rs 50 lakh or more if the income of the individual is not high he may not require high cover.

9) A stitch in time saves nine

Even if you have missed the July 31 deadline for last year, you can go ahead & file your tax return immediately. Penal interest is applicable for delayed filing, ONLY IF you have any pending tax liability. Suppose your entire tax liability has been paid up before March 31, 2015 then there is no penal interest liability for you to take care of at the time of filing your returns for March 2015. Also Read Article: Missed filing Income Tax Return for FY 2013-14 and FY 2014-15? Last Chance to file return before 31 March 2016

Also filing return will give you peace of mind and satisfaction that you are contributing for building nations wealth.

For any query you can write to chirag@cachauhan.in before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.

 

If you like my article, please share this on :


Search Professional Post Query Post Assignment Read More Articles

In case of business query on above subject, comment here or contact CA Chirag Chauhan




article author

CA Chirag Chauhan

Tax Expert
Chartered Accountant, CA Chauhan



CHECKOUT TRENDING ARTICLES


  • How to Pay Zero Tax for Income up to Rs 12 Lakhs from Salary for Financial Year 2016-17

  • Do not wait till 31st July to file your Income Tax Return – Keep Ready 9 documents to file before due date

  • Missed to Submit HRA declaration to Employer? You can claim HRA at the time of Filing Returns and get Refund from Income Tax

  • Features and Step wise process - Income Declaration Scheme 2016 – Convert your Black Money to White

  • How to Pay Zero Tax for Business Receipts -Turnover of Rs 1 Crore

  • How to Pay Zero Tax for Professionals (CA, CS, Lawyers, Doctors, etc) earning Income of Rs 16 Lakhs

  • Why you should file Income Tax Return? Benefits of Filing Income Tax Returns

  • How to save Rs 10 crore as retirement corpus

  • Having Turnover of Less than 10 Lakhs? How to File NIL Service Tax return with Circular No 033/2012

  • Starting a New Business or Profession? Compare Structure and type of Entity– Sole, Partnership, LLP or Company

  • Revised and Latest TDS Tax Deducted at Source Rate Chart for FY 2016-17 AY 2017-18

  • Exemption for Capital Gain Arising on Transfer of Resident House Property

  • WILL- Important points, Tax Advantages of will and Format of WILL

  • Revised and Latest TDS Tax Deducted at Source Rate Chart for FY 2016-17 AY 2017-18

  • Exemption for Capital Gain Arising on Transfer of Resident House Property

  • WILL- Important points, Tax Advantages of will and Format of WILL

  • Senior Citizens Tax Benefits in Income Tax Act - Filing, exemptions, advance tax and other benefits

  • Registration process for Trade Mark


  • GET FREE ARTICLE UPDATES VIA EMAIL

    Always stay updated with latest information on expertmile

    I hope by reading this article you got enlighten on ,Why you should file your Income Tax Returns? Benefits of Filing Income Tax ReturnsWhy Should You File Your Tax Return? , 9 Benefits of Filing Regualr Income Tax Return, Building a Strong Balance sheet over 20-30 years and create Financial History , File Income Tax Return if Applying for VISA in case of Travel Abroad , File income tax return to claim Accidental Claim in Third Party Insurance, Buying a High Life Insurance Cover requries filing income tax returns, further to mention before taken any financial decision based on this content it is prefered to take an expert opinion as matter can be subjective.