Voluntary Tax Filing & Its Advantages. In India, filing an income tax return is compulsory if the income of an individual exceeds the basic exemption limit provided by the Income Tax Act 1961. The exemption limits in India vary with the age of the individual. You can understand it through the following table:
|Non Senior Citizens||Below 60||250000|
|Senior Citizens||More than 60||300000|
|Super Senior Citizens||More than 80||500000|
There are certain cases where Income tax return filing is mandatory. Such cases include:
- Expenditure of more than Rs.100000 towards electricity consumption
- Expenditure of more than Rs. 200000 towards foreign travel
- When someone wants to carry forward losses to the next year
Benefits Of Tax Filing
But if one doesn’t fall under any of the above criteria, then he may experience certain benefits. These benefits are:
Mandatory By Statute:
Certain body corporates are required to file ITR irrespective of their profits or losses during the financial year. Section 139 of the income tax act also mandates certain business entities to file their income tax return irrespective of income.
When an individual has already paid taxes over what has to be paid, he can claim a refund on such tax.
Carry Forward Benefit:
When an individual has computed a loss which couldn’t be set off in the current financial year, he can carry forward it to the next financial year only if a return is filed.
Not Liable For A Higher Tax Deduction Or Collection:
Section 206AB or Section 206CCA prescribes the deduction or collection of tax at higher rates where a person fails to furnish his return of income for a specified period and the amount of tax deduction/collection during the period exceeds the specified limit. A person can avoid such a higher tax deduction/collection by furnishing an income tax return.
Avoid Late Fees And Interest:
One may be charged with penalties and late fees if they do not furnish their income tax returns in the given time.
Avoids The Best Judgement Assessment:
Best judgement assessment is done by tax authorities to assess the tax liabilities of taxpayers when they fail to provide accurate information. Filing an ITR helps to avoid the best judgement assessment.
Loan And Credit Card Approvals:
Income tax returns can also act as proof in certain areas. Sometimes banks and insurance companies ask for proof of income. It helps in the faster processing of loans and credit card applications.
In conclusion, filing an income tax return is not only an obligation but also provides numerous benefits to individuals and certain benefits. There are certain entities and income groups for whom it is mandatory to file ITR. But still, there are compelling reasons to file voluntary income tax returns. Filing income tax returns not only ensures compliance with tax laws but also empowers individuals to make the most of available tax benefits and financial opportunities while avoiding potential pitfalls. Contact our tax professionals at FileMyReturn to resolve your filing-related queries.