5 Reasons to File ITR

Are you someone whose income doesn't come under the taxable income slabs? If you are, and if you confidently assume that e-filing ITR isn’t meant for you, then, my dear friend, you are mistaken! Many of us might not be using much of our academic knowledge from our school and college days in the jobs that we do. However, does it mean that education is not necessary for accomplishing life goals? Similarly, whether your salary is taxable or not - filing income tax returns is crucial.

What is Income Tax Return or ITR?

An income tax return is a form through which taxpayers declare their income, deductions, and tax payments. The total income tax that you have to pay to the government is calculated during the ITR filing. If you have paid more income tax than required in a particular financial year, the IT department will refund the extra amount to your bank account. In case you have paid a lesser amount of tax, then you should pay the remaining amount before filing your income tax returns for that year. The income tax return form ranges from ITR 1 to ITR 7 for different slabs of income.

How to e-file ITR?

• Filing an income tax return is mandatory for Indians if one’s total income exceeds Rs 2.5 lakh. Even if you don't fall under the taxable income range, it's beneficial to file an income tax return. Wondering why? We will discuss that in the next section.

• You can submit your income tax returns online, either through the income tax portal or through our mmk e-filing tool. E-filing has made the ITR process exceptionally fast and immensely convenient.

• After filing your tax return online, a 15-digit acknowledgment number will be displayed on the portal's screen, confirming your submission. At this stage, you must verify your tax return, which you can do through your net banking account.

• Please note that the due date to e-file your income tax returns is on or before July 31 every year, until the government decides otherwise.

Benefits of Filing ITR

Filing ITR entails a plethora of benefits. Here are a few of them:

Processing of Visa – If you are planning to travel abroad in the future, then take this heads-up – the issuing authorities will ask you to submit your income tax filing proof for at least two to three years to the embassy/consulate of the respective country.

Processing of Loan – Irrespective of the loan type, the bank will ask you to provide records of tax returns for the past few years to determine your financial stance. Submitting of your tax returns can get you quick loan approval.

Carry Forward Your Losses – According to the laws of the income tax department, you can carry forward previous losses (depreciation in house property, loss in the share market, etc.) to offset any future revenue for up to eight years consecutively.  So, even if the revenue that you have earned in the next financial year has fallen into the taxable income bracket, you can adjust your previous losses against that income by filing an ITR on time.

Refund of Taxes – Employers deduct TDS on the income of employees. If you, as an employee, has made investments that are tax-deductible, it inevitably reduces your tax liability. If your employer has deducted more TDS than you owe, you can file an income tax return and easily retrieve the amount deducted in excess. This refund can also be claimed for TDS deducted through any other sources. In case you don’t come under the income tax bracket, filing ITR will lead you to pay zero tax. However, it will help you in generating an ITR record that is instrumental in availing loans, certain insurances, and a few types of visas.

Save Penalties – Being in the tax bracket, if you fail to file your returns on time, then you might be penalized with a massive amount and also pay interest on the pending dues under section 234A.

In a Nutshell

Now that you’ve understood the benefits of e-filing ITR, we are sure that even if you haven't filed an ITR in the past, you will take the initiative this year. If you are wondering which website can assist you the best with the e-filing procedure, mymoneykarma is here for you. Use our services for e-filing your ITR - it’s free, and it’s super helpful! Happy Returns!

This article is purely educational and should not be considered as tax advice. mymoneykarma does not provide tax advice. For tax counsel, please reach out to a tax advisor.