Benefits of filing of Income Tax Returns (ITR Filings)

 

1) Mandatory  Filing

In any of the following situations (as per the Income Tax Act), it is mandatory for you to file  Income Tax Return in India.

• Your gross total income (before allowing any deductions under section 80C to 80U) exceeds Rs 2.5 lakhs in the Financial year (April to March of the Following Year). This limit is Rs 3 lakhs for senior citizens (aged above 60 but less than 80) or Rs 5 lakhs for super senior citizens (aged above 80). (In the Union Budget 2021, the finance minister Nirmala Sitharaman announced that senior citizens above the age of 75 years, who only have pension and interest as a source of income will be exempted from filing the income tax returns. During her budget speech, Sitharaman said, "In the 75th year of Independence of our country, the government shall reduce the compliance burden on senior citizens who are 75 years of age and above.")
• You are a company or a firm irrespective of whether you have income or loss during the financial year

  

  Taxplaner.in

• You want to claim an income tax refund
• You want to carry forward a loss under a head of income
• You Want to Plan to Study Abroad or Settle Abroad 
• Return filing is mandatory if you are a Resident individual and have an asset or financial interest in an entity located outside of India. (Not applicable to NRIs or RNORs) 
• If you are a Resident and a signing authority in a foreign account. (Not applicable to NRIs or RNORs)
• You are required to file an income tax return when you are in receipt of income derived from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust (Other Entities).
• If you are a foreign company taking treaty benefit on a transaction in India
• Proof of return filing may also be required at the time of applying for a loan or a visa

2. Income Tax Return Filing for NRIs

NRI or not, any individual whose income exceeds Rs. 2.5 lakhs (for Financial year) is required to file an income tax return in India. Please note that for an NRI, income earned or accrued in India is taxable in India.

3. Why e-file income tax return

A significantly large number of returns are e-filed and gradually the income tax department is hoping to bring all returns online.

It is mandatory to file the income tax returns online for all the registered taxpayers whose taxable income. However, paper returns can be filed by those who are above 80 years of age and do not have any income from regular business or profession. (In the Union Budget 2021, the finance minister Nirmala Sitharaman announced that senior citizens above the age of 75 years, who only have pension and interest as a source of income will be exempted from filing the income tax returns. During her budget speech, Sitharaman said, "In the 75th year of Independence of our country, the government shall reduce the compliance burden on senior citizens who are 75 years of age and above.")

4. Penalties for non-filing income tax return

Under section 271F, the assessing officer may levy a penalty of Rs 5.000 when you have not filed your return. (applicable until FY 2016-17).

From FY 2017-18 onwards, penalties for non-filing an income tax return are as follows:

a. A penalty of Rs 5,000 is applicable if the return for the Financial year is filed after the due date but before 31 December of the Following Year.

b. A penalty of Rs 10,000 is applicable if the return for Financial Year is filed after 31 December of the Following Year but by 31 March. 

( Eg. For the Financial Year 2020-2021, a penalty of Rs 5,000 is applicable if the return for the Financial year is filed after the due date but before 31 December,2021.  and penalty of Rs 10,000 is applicable if the return for Financial Year 2020-2021 is filed after 31 December,2021 but by 31 March,2021. )

Note: Penalty is limited to Rs 1,000 for those with income up to Rs 5 lakhs. These provisions are covered under a New Section 234F.

5. Furnishing Details of Investments

In case your annual income is above INR 50 lakh, you are required to provide details of your investments,  as well as property holdings if any. You will need the original purchase documents for all these assets, for proof of valuation.

Advantages of filing Income tax return:

1. Easy Loan Approval

Filing the ITR will help individuals when they have to apply for Personal loan, Credit Card,  vehicle loan (2-wheeler or 4-wheeler), House Loan, etc. All major banks can ask for a copy of tax returns

2. Claim Tax Refund

If you have a refund due from the Income Tax Department, you will have to file an Income Tax Return to claim the refund.

3. Income & Address Proof

Income Tax Return can be used as proof of your Income and Address.

4. Quick Visa Processing

Most embassies & consulates require you to furnish copies of your tax returns for the past couple of years at the time of the visa application.

5. Carry Forward Your Losses

If you file return within due date, you will be able to carry forward losses to subsequent years, which can be used to set off against income of subsequent years. You have to Declare All Sources of income without withholding any details.

6. Avoid Penalty

If you are required to file your tax returns but didn’t, then the tax officer deserves the right to impose a penalty of up to Rs.5,000 / 10000.

Thanks & Regards

CA NAVEEN KUMAR DIGUVA SADUM

NAVEEN KUMAR D S & CO

Chartered Accountants

Phone: 90590 95083

Email id: ca.naveenkumards@gmail.com

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.