When the gross income goes beyond a certain limit, you have to file an income tax return. The limit is different for senior citizens. If your income is less than the tax exemption limit, you can still file the tax return voluntarily. If you are wondering whether you should file the income tax return or not, the following are the reasons you must not skip the schedule. Read the following to know more.
Whether it is an individual or a firm, the losses incurred in the business, which may be speculative or non-speculative and the capital losses both long and short-term cannot be established as an exemption when it comes to carrying forward the losses of the year before. Individuals and businesses can claim the benefits only when they file the income tax return.
When you study the norms of section 234F of the Income Tax Act, you have to furnish the return latest by July 31, and failing to do so can levy a penalty if you file it before December 31. More fees or penalty can be levied if the time exceeds beyond the month of December. However, if the total income does not exceed beyond five lakhs, the fees may not exceed beyond Rs 1000. Consulting a top tax consultant in India may be necessary if you fail to maintain the timeline for filing the return. Without a legal consultant, you may invite more trouble as you may not be familiar with the rules.
Filing the income tax return is not only a social or moral obligation, but every citizen of this country needs to do it to claim the refund of the income tax. It is a mandatory system to file the income tax return and the citizens are legally liable to file the return every year.
You must establish a proof of the income tax return you have filed to secure loans from banks and other financial institutions. Whether it is an educational or home loan, you must provide a copy of the return to allow the loan to process smoothly. You may also need to produce the return if you are planning to go abroad and require a visa. The credit card companies may also ask for a proof of the return before issuing a card.
▪ Registering immovable property
Several states may require the income tax return you have filed for the last three years during the registration of immovable property. Having a legal sanction of the income, whether it is taxable or not helps you to have a backup to possess the record of the wealth or the property you own. When you file the income tax return, you will not only prove that you are a responsible citizen but also facilitate the governance.
However, a common question that grips your mind is the consequences you may face if you fail to file the return. Regardless of the status of your business or what you earn, it is mandatory to file the return. For the salaried individuals, filing the income tax return is beneficial as it comes with multiple benefits. The following points highlight the consequences of not filing the income tax return.
Do you have taxable income and have not filed the income tax return? The income tax department may charge you with penalties if you do not file the ITR within time. The amount of penalty that may be levied is going to differ based on your income and the time span. Apart from this, the assessee will also pay interest amounting to 1% if you have the liability of tax for the respective year.
During the calculation of income, while filing the income tax return, you may mention the wrong income by mistake. The error may also occur due to the mistake of the clerks in the respective department of the income tax, but such errors can be revised only when you file the return within the designated timeline. If you become a victim of such errors, you may not be able to revise the return. Businesses must go for corporate tax planning in India for revising the returns when such incidents occur due to the errors.
When you pay more tax than required, you can ask for the refund of the excess amount you have paid if you file the tax return timely. However, if you hold back the return for the current year, you are not liable to receive the refund of the excess amount that has incurred during the previous year.
When you keep a record of your income with the government by filing the income tax return, it defines your financial worth. The track record of the income tax return determines the financial capacity of an individual or a firm. It acts as a supportive document for processing the loan and also in high-risk insurance coverage. For filing corporate tax returns in India, you must get in touch with a tax consultant.
Even though you file the income tax return every year, if you fail to pay the amount for the current year, you will be under the scrutiny of the income tax department. Even if your income is below the tax exemption limit, you cannot escape the scrutiny of the Income Tax department. You may face adverse consequences if you fail to file income tax within the time.