Why should you file an income tax return?
This is one of the most common questions which is raised by many citizens. Is it compulsory to file the return? How can the Tax Authorities get to know about income details if the person is not filing the income tax returns?
This question can be simply compared with the question “Is it necessary to stop at the signal while driving the vehicle or walking?” The answer is simply Yes because the law requires it. Same is the answer for filing income tax returns. If the person has taxable income it is mandatory to file the return. It’s not a choice, it’s a compulsion.
The next question arises is how the income tax officers will get to know about the person’s income if there are no digital transactions or the business carried out by the taxpayers is unorganized? .
It may be noted that the income tax department is keeping a third eye on all its citizens and collecting the information from multiple sources. So, it is always advisable to file the return of income to avoid the penal consequences. It may be noted that not paying the legal dues not only attracts monetary penalty but may also be liable for prosecutions.
Besides this, there are few advantages of filing income tax returns. The same are summarized as under:
1. For filing of Government Tenders:
There are various tenders wherein there is a requirement of submitting the income tax return. Without the availability of ITR, such people cannot submit the tender forms. In various cases, even the ITR for the last 3 years are required. So, to be eligible for such tenders, the person should regularly file the income tax returns.
2. For availing loans, finance, credit cards & other credit facilities:
Normally, all the banks, financial institutes demand the income tax returns for granting any sort of loans, finance, credit cards & other credit facilities to the applicant. Submission of ITR is a prerequisite for all availing all such loans. In normal course, such a lender requires the ITR’s for the last 3 financial years before entertaining the proposal.
3. Proof of past saving:
Income tax returns serve the purpose of income earning of the citizens. It could be taken as evidence of earning in the past. It enables the person to establish the fact that there was earning in the past and the assets are not undisclosed or black money of such person.
4. Records in case of a death of the person:
Filing income tax returns and availability of records like Balance sheet, P & L A/c etc enables the successor and legal heir to know the assets details of the deceased. It enables the passing on the properties to the legal heir without any trouble and hurdles of the tax department subsequently.
5. For foreign Tours:
There are various countries in the world where visit is only after the grant of VISAS. Before granting visas, such country officials verifies the income tax documents of the applicants to ascertain the income earning of such person. The visas are granted only after these verification. Filing an income tax return enables the person to get the visa for foreign travel.
