The month of July is approaching and so is the time for filing your income tax return. The aforementioned statement is not meant to make you anxious or nervous about filing your income tax return, rather it is a step towards assisting you in fulfilling your mandatory obligations and responsibilities within the given time. You must be wondering how are we going to achieve this through this blog? This blog is an attempt to lessen your worries by clearing out the misconceptions that most of us hold regarding filing our income tax return as it is always better to live with facts rather than keep fretting due to self made inappropriate assumptions
Most often or not people try to shirk away from their responsibility of filing their income tax return due to which they have to face severe penal consequences later. They assume that making advance tax payments is more than enough to meet all of their tax liabilities which is not true in any case. Another common misconception amongst people is that filing of income tax return is an additional compliance put as a burden on taxpayers by government of India. No, fortunately it is not! Income tax return filing is simply a statement of your earnings from various sources of income, details of tax paid, tax liabilities and any refunds to be made by the government.
Thus, the government provides ample time to furnish these details such that the taxpayers get sufficient time to accumulate the data for the whole year and accurately report within the given time to the government. The deadline is usually kept after four months from the end of the financial year to furnish these details
However, apart from the penal consequences a taxpayer also deprives himself/herself from leveraging certain benefits of filing their income tax return. Here is a quick review of 7 advantages that one could get by filing his/her income tax return in time: 7 Advantages of Filing Income Tax Return
1. For eligibility in all loan applications from Banks
For availing various loans such as housing, personal or business loan the applicant would be required to produce income tax returns of last 3 years as the basic need required for the declaration of his/her income. Income tax return is a means to make the banks aware about the applicant’s financial capacity and the details about his/her income as shown in it.
2. For Accidental Claims in Third Party Insurance
Yes, indeed most of us are not aware about this fact but it is one of the rare advantages of filing the ITR every year. Irrespective of whether the income crosses the threshold of taxable limit, you can file ITR for your spouse or yourself as it will help you claim the insurance during court trial in case of accidental death of any one member(s) during a road accident. This is because the insurance companies and the court require proof of income that is provided in ITR during the trial. Hence, in the absence of any ITR for last three years, the claim amount could be lowered or even made negligible. This concludes that ITR is considered as the prime evidence in the eyes of law for assessing one’s income. The formula used for calculating the claim amount is to multiply the yearly income in ITR with years of expected life of deceased
3. For Startup Funding
All startup seek funding through seed, venture capitalists or angel investors who ask for income tax returns filed till date to carry out their statistical analysis. They need to assess multiple things like your profitability, scalability, validity of the data produced from the auditor’s report and various cost parameters from returns filed.
4. For appointment in Judicial & Class one Jobs
Senior auditors post income tax return is required in judicial jobs where a candidate is a chartered accountant or lawyer and needs to show annual professional income for the judicial/judges. The selection body only requires last 5 to 7 years’ income tax returns to check the candidate’s credibility.
5. For immigration profile obtaining visa outside India
The VFS centre across India or the High Commissions of various countries want to know whether the applicant is financially sound so that they can issue him/her a visa. For this purpose they find ITR of the applicant to be the most reliable evidence. If you dream of going abroad in future and want to convert your dream into reality then it is advised to file genuine returns. If return of any single year is absent then the chances of obtaining foreign visa under investor, visitor or work permits category decreases.
6. For obtaining government tenders, registration on panels
The yearly income tax returns plays a decisive factor in estimating the value of business profiles of various contractors, corporate agencies, professional service providers or individuals. These returns are needed by contractors in an accurate manner i.e. audited (if required) and duly signed with necessary documents to produce when asked in tender approval meetings or for finalizing professional panels. Also, the tender scrutiny committee might ask for ITRs for last 5 to 7 years to check whether that amount of work has been done by the applicant earlier. Hence, if you wish to expand your horizons and grow your business through obtaining tenders from private or government bodies, you need to be regular with filing income tax returns every year
7. For obtaining LIC/GIC agency
In order to allot an agency to an agent, insurance corporations generally ask for last three years’ income tax return filed by him/her. This is critical for scrutinizing the financial health and habits of the agents.