Why should We File Income Tax Return?

Let me tell you why should we file ITR? Filing an Income Tax Return (ITR) is a legal obligation for eligible taxpayers and offers several financial and compliance benefits. If your annual income exceeds the basic exemption limit (Rs. 2.5 lakh for individuals under 60, Rs. 3 lakh for seniors), filing ITR is mandatory under the Income Tax Act, 1961.

Why Should We File IT Returns?

IT filing is necessary as non compliance may attract penalties or legal scrutiny. 

1. If excess tax (TDS/advance tax) has been deducted, filing ITR is necessary to claim a refund from the Income Tax Department.

2. ITR serves as proof of income for loans, visas, or high-value transactions (property purchase, foreign travel). Many banks and embassies require the last 2-3 years’ ITRs.

3. Unadjusted losses (from house property, stocks, business) can be carried forward to future years only if ITR is filed on time.

4. Late filing may lead to a late fee (up to Rs5,000) under Section 234F and interest on unpaid taxes.

5. Deductions under Sections 80C (PPF, insurance), 80D (health insurance), and others can only be claimed via ITR, reducing taxable income.

6. Regular ITR filing ensures transparency, helps track earnings, and simplifies future tax planning.

I hope this helps you understand why should we file ITR.

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What is the Minimum Income to File ITR: Essential Guidelines

Wondering why should we file income tax return. Here is the reason. Filing income tax returns in India is mandatory for individuals and entities that meet certain criteria. However, even for those who aren't required to file, there are several reasons why it's beneficial to do so which I shared below.

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Why Income Tax Return Filing is Important?

• Individuals and entities whose income exceeds the basic exemption limit set by the Income Tax Act are required by law to file income tax returns. Failure to do so can result in penalties and legal consequences.

• Filing income tax returns ensures compliance with tax laws and regulations. It demonstrates your willingness to fulfill your civic duty and contribute to the country's revenue.

• Income tax returns serve as an official record of your income for a particular financial year. Having these records can be useful for various purposes such as applying for loans, visas, or insurance policies.

• If excess taxes have been deducted from your income, filing income tax returns allows you to claim a refund from the government. This can occur due to TDS deductions, advance tax payments, or other reasons.

• Filing income tax returns within the specified due dates helps avoid penalties and interest charges levied by the Income Tax Department for late filing.

• Regularly filing income tax returns helps in building a financial history, which can be beneficial for future financial planning and transactions.

• Banks and financial institutions often require income tax returns as proof of income when assessing eligibility for loans and credit facilities. Filing returns can simplify the loan approval process.

• Income tax returns are often required as part of the documentation for visa applications, especially for foreign travel or immigration purposes.

• Filing income tax returns allows individuals to assess their tax liabilities and plan their finances accordingly. It provides insights into available deductions, exemptions, and tax-saving investments.

By filing income tax returns diligently and accurately, you can have peace of mind knowing that you are fulfilling your tax obligations and avoiding any potential legal or financial consequences.

This is why should we file income tax return. 

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