Income Tax Return
What is Income
Tax Return is a proof that you have paid your income tax. It contains
details about your annual income and the amount of tax you have paid.
Every year, Indian citizens who earn taxable income have to file Income
Tax Return (ITR). Filing ITR will help you in getting a refund in case
you pay more tax than what you are required to pay. If you fail to file
your ITR, you might have to pay penalty or face legal consequences.
ITR Filing Due Date A.Y. 2020-21 (F.Y. 2019-20) :
The due date for filing ITR for 2020-2021 for Individuals/Body of Individuals (BOI)/Hindu Undivided Family (HUF) /Association of Persons (AOP) is 31st December 2020. Individuals whose accounts need to be audited must file their IT Returns by 31st MARCH 2021.
Benefits of Filing Income Tax Return Online
Though it might be a tedious process to keep a track of every nifty detail needed in order to file the proper details for the Income Tax Return, it actually helps a lot when it is done in the earnest and ahead of time, preferably, online -
Online filing of returns ends by July 31 or every financial year, and being a month or two in advance in filing the income tax returns actually ensures one encounters lesser traffic and the entire process goes much smoother.
Creating a favorable financial history: Online filing of the income tax returns actually creates a history of your financial records with the tax department in a much faster and easier way. This history is favored by a lot of organizations, be it financial or otherwise, whom you might have a business relationship with in the future.
Creating a favorable financial history- Online filing of the income tax returns actually creates a history of your financial records with the tax department in a much faster and easier way. This history is favored by a lot of organizations, be it financial or otherwise, whom you might have a business relationship with in the future.
Proof of financial record - Having an ITR-V form is always handy, since one can readily furnish the same as a proof for any kind of financial liability or opening a line of credit.
To carry forward losses - If you do not file returns, you will not be able to carry forward capital losses (short-term or long-term), if any, in a financial year to be adjusted against capital gains made in the subsequent years.
Visa processing - If you are traveling overseas, foreign consulates ask you to furnish ITR receipt of the last couple of years at the time of the visa interview, says Rao. Some embassies may ask for ITR receipts of previous three years, while some others may ask for the most recent certificate.
This is especially true if you plan to travel to the US, UK, Canada or Europe, not so stringent for South East Asia or Middle East.
“Producing ITR receipts show that one has some source of income in India thus, strengthening your case as someone who will not leave the country for good but will return,” explains Rao.
When traveling to foreign countries, whether on a business or leisure trip, experts suggest you always carry income-related proofs along - salary slip, Form 16 and ITR receipts. Consulates specify these requirements in most cases.
Buying a high life cover - Buying life cover of Rs 50 lakh or Rs 1 crore has become commonplace. However, these covers are available against your ITR documents to verify annual income. “Life insurance companies, especially LIC, ask for ITR receipts these days if you opt to buy a term policy with sum insured of Rs 50 lakh or more,” says Sankla.
The sum insured one can get with a term cover depends on many factors one of which is the income of the insured. If an insured does not have a very high salary, he doesn’t need a higher insurance cover.
Experts say that if one plans to start their business and need to fill a government tender or two for the same, they will need to show their tax return receipts of the previous five years. This again, is to show your financial status and whether you can support the payment obligation or not.
However, this is no strict rule. It may vary depending on the internal rules of the government department. Even the number of ITRs required can vary.