The number of earning individuals in India is very high when compared to those who pay their taxes. Till now, the Income Tax Department has issued notices to people to pay their taxes. Read this article to know if you are one of the few who need to file ITR.
You can file this year’s Income Tax Returns until December 31 with the late fee. This is your chance to fix and update your income tax returns if you need to correct your tax returns. There’s only one week left. If you earned income through online games, lotteries, or betting and didn’t mention it in your return, you can do it now.
India has a very small base of citizens paying Income Tax and an even smaller base when it comes to filing income tax returns. Over the years, the government has tried hard but failed to increase these sets of people who file their returns substantially. But the IT department has now started to roll out notifications to many people who haven’t paid their taxes. Now, who needs to file their returns?
When you file ITR, it offers several financial and non-financial advantages, such as relatively easy access to loans, avoidance of interest and penalties, the ability to claim a tax refund, simple visa processing, etc., and it is also a social obligation for every taxpayer.
What is an Income Tax Returns?
ITRs are tax return forms that taxpayers use to inform the Indian Income Tax Department of their income and assets (Indian Revenue Authorities). It contains information about the financial and personal information of the taxpayers.
ITRs are essentially the taxpayer’s self-declarations of their income, assets, and any taxes that have been paid that are appropriate. Senior citizens have the option to file it manually even though most individuals file ITR electronically.
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Why is ITR Mandatory?
As per the Income Tax Act, it is mandatory to file Income Tax Return in India if your gross total income (before any deductions) exceeds ₹5 lacks in a financial year. It does not matter if you are earning the income as a salary or as interest from your investments. Therefore, you need to file your returns.
Every year, filing tax returns is viewed as a moral and social obligation of each and every responsible citizen of the nation. It serves as the basis on which the government calculates the amount and needs of citizen expenditures and offers the taxpayer a platform to occasionally request refunds in addition to other forms of relief.
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Benefits of Income Tax Returns Filing
Easy Loan Approval
When applying for loans, banks and private financers require numerous documents, including income proof. Filing your Income Tax Return (ITR) serves as evidence of your consistent income over the past periods, crucial for assessing your loan repayment capability. This proof of income is mandatory for loan approval, whether for purchasing vehicles, home loans, or personal loans.
Claim Tax Refund
If you have had tax deducted at source (TDS) from your income, such as interest on fixed deposits, rental income, consultancy income, or salary, filing an ITR allows you to claim a refund. In cases where TDS exceeds your actual tax liability, filing an ITR is essential to get back the excess amount deducted.
Income & Address Proof
Your ITR can serve as proof of both your income and address. This is particularly useful for obtaining essential documents like Aadhaar cards, licenses, and passports. Having your ITR as proof simplifies the process of verifying your financial and residential details.
Quick Visa Processing
Most embassies and consulates require copies of your tax returns from the past few years when processing visa applications. These documents demonstrate your financial stability and civic responsibility, making timely filing of your ITR important for smooth and quick visa processing.
Carry Forward Your Losses
Filing your ITR allows you to carry forward any losses incurred from business, stock market investments, or rental income. These losses can be offset against future income, reducing your tax liability. However, this benefit is only available if you file your return within the original due date.
Obtaining Government Tenders
For contractors seeking government tenders, timely and accurate filing of ITRs is crucial. The tender scrutiny committee often checks ITRs from the last 3 to 5 years to assess financial reliability. Properly filed and audited ITRs can significantly enhance your chances of securing government contracts.
For Buying Term Insurance
Insurance providers often require ITR records as proof of annual income when approving term insurance plans. The coverage amount is based on your earnings, and presenting your ITR helps insurers determine your income level, ensuring appropriate coverage and policy approval.
Funding for Startup Ventures
When seeking funding from venture capitalists or seed investors for a new or existing business, your ITR provides critical financial information. Investors use your ITR to assess your business’s financial stability and profitability, often cross-checking the data with audited reports to make informed investment decisions.
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What happens When you Miss the ITR Deadline?
If you are in any of the above cases, you must file your IT returns. It is to note that once you elapse two years, you cannot file a delayed return. However, a notice does act as an opportunity for those who did not file the IT returns during the two-year extended deadline period that is offered. You are allowed to file the return in response to the notice.
Filing ITR Online (e-Filing ITR)
A sizable portion of returns are electronically filed, and the income tax administration is working to eventually make all forms available online. All registered taxpayers with taxable income are required to electronically file their income tax forms. However, persons over 80 years old who do not get any regular company or professional income may file paper returns.
FAQs
What is the last date to file ITR 2022-23 in India?
The last date to file your Income Tax Return (ITR) for FY 2022-23 (AY 2023-24) without a late fee is 31st July 2023.
Is the income tax extension for 2022-23?
There is no income tax extension for 2022-23. Taxpayers filing their return after the due date will have to pay interest under Section 234A and a penalty under Section 234F.
How to file ITR for 2022 to 2023?
The ITR filing due date for FY 2022-23 (AY 2023-24) is 31st July 2023. If you’ve missed the deadline, worry not! Our team of experts can help you file your ITR in no time and get you back on the right track!
Conclusion
To sum it up, there are various reasons one should pay taxes and file Income Tax Returns. The volume of tax return files has significantly increased during the past few years. Additionally, the government has put up a number of initiatives to promote the filing of ITRs by qualified taxpayers.
A person must submit an ITR to the tax department alerting them of the additional taxes that have been deposited against their PAN. The income tax division compares the information provided on the ITR with the data they already have. Refunds for income taxes are given out if the information is accurate.
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