2022-07-01 09:30:17

Is It Necessary to file the ITR

Introduction

Indian government framed the Income Tax Laws. The tax imposed by the government on all persons who are individuals, Hindu Undivided Families (HUFs), Companies, firms, LLP, etc. According to the Law, a person levies the Tax it depends upon his residential status. Every Individual who qualifies as a resident in India is necessary to pay the tax on his or her income. Taxpayers have to follow some rules when filing their Income Tax Returns.

Income Tax Return

Income Tax Return is used to file information about your Income and Tax which is submitted to the Income Tax Department. The taxpayer calculated the Tax which is based on his or her Income. If in case the returns show that the extra tax has been paid during the Financial Year then the person will receive the Income Tax Refund from the Income Tax Department. According to the Income Tax Laws, the return must be filed by an individual or business which earns any income during the financial year. The income is in the form of salary, business profit, income from house property, and any other sources. ITR has been filed by an individual or a business before the specified date by the Income-tax department. If a taxpayer fails to file the ITR within the time then he or she may be liable to pay penalty.

Who files the Income Tax Returns?

According to the Income Tax Act, income tax has to be paid only by individuals or businesses that fall within certain amounts of income. Entities or businesses which are required to compulsorily file their ITRs in India which mentioned below: -

All individuals, up to the age of 59, whose total income for a financial year exceeds Rs.2.5Lakh. For senior citizens (aged 60-79), the limit increases to Rs.3Lakh, and for super senior citizens (aged 80 and above) the limit is Rs.5 Lakhs.
All registered companies generate income, regardless of whether they've made any profit or not throughout the year.
Those who wish to claim a refund on the excess tax deducted/income tax they've paid.
Individuals who have assets or financial interest entities that are located outside India.
Foreign companies that enjoy treaty benefits on transactions made in India.
NRIs that earn or accrue more than Rs.2.5Lakh in India in a single financial year.

Documents required to file ITR

It is important to have all the relevant documents before filing ITRs. They are mentioned as following:

Bank account passbook
Salary Slips
Aadhar Card, PAN card
Form-16- TDS certificate which is issued to you by your employer to give all the details of the salary to you. If any Interest certificates from banks and post office and TDS which is deducted on it.
Form-16B- From the buyer, if you have sold a property, showing the TDS deducted on the amount which is paid to you
Form-16C- Form your tenant provides the all details of TDS which is deducted from the rent received by you.
Form 26AS - your annual tax statement which provides all the information about the tax deposited against your PAN

a. TDS deducted by your employer

b. TDS deducted by banks

c. TDS deducted by any other organizations from payments made to you

d. Advance taxes deposited by you

e. Self-assessment taxes paid by you

f. Tax-saving investment proofs

Home loan deduction

Is it necessary to File ITR?

In case, the taxpayer does not cross the exemption limit which is specified then it is necessary to file the ITR for some benefits which are given following:

1. Access to loans and credit facilities: - ITR filing regularly which is documentary evidence of the steady income and an indication that the individual has been paying taxes systematically. Financial institutions' investigation before approval of the loan and credit lines such as overdrafts, credit cards, cash credits, and bill discounting facilities seeks that the person files ITR in previous years. It means it also plays an important role in the credit history of a taxpayer through the Credit Information Bureau India Limited (CIBIL) score.

2. For easy visa processing: - It is important to proof of an Individual’s income and it is often considered by some countries while the processing of visas.

3. Acts as income and address proof: - ITR filings can also be used as income and address proof. Contrary to employed individuals who receive salaries and are in possession of tax withholding certificates, ITR filings to those who are self-employed and do not have any proof of income to produce.

4. Claiming tax refund: - Income tax refunds are common, and many taxpayers claim them each year. Taxpayers are eligible to claim a refund that paid more than their tax liability.

5. For obtaining tax clearance certificates: - For high-value transactions or foreign transactions, especially in case of sale or transfer of assets when it is required to Income Tax Return certificate under Section 281 of the Act. After filing regular ITR is to obtain the tax clearance certificate.

6. Makes one eligible for government tenders: - If one is intending to undertake any government projects through the filing of tenders then the ITR of the previous few years is more important to qualify. It is one of the absolute factors to make eligible to apply for such tenders.

7. Accumulated income act as proof: - In essence, ITR gives the details of income earned throughout the years. At a later stage, these details play a vital role during the transactions related to property purchases, investments, etc.

Conclusion

It concluded that Tax imposed by the government on all persons who are individuals, Hindu Undivided Families (HUFs), Companies, firms, LLP, etc. According to the Law, a person levies the Tax it depends upon his residential status. Every Individual who qualifies as a resident in India is necessary to pay the tax on his or her income. If in case the returns show that the extra tax has been paid during the Financial Year then the person will receive the Income Tax Refund from the Income Tax Department. According to the Income Tax Laws, the return must be filed by an individual or business which earns any income during the financial year.

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