Why Should I File Income Tax Return

Published on February 2017 | Categories: Documents | Downloads: 38 | Comments: 0 | Views: 281
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Why should I file Income Tax Return?
Filing of return provides legality to what we are earning whether we are paying tax on it or not.
Prompt payment of taxes and filing of returns is less likely to attract attention of the IT
Department. Accordingly, filing of returns is significant in many ways as follows:-
1. A mandatory concept has been introduced for every person to file his return even if it is
below the exemption limit, no matter what.
2. Any transaction can be legally entered into because the government is having records of
the income and it is collecting tax on it.
3. Payment of taxes helps every citizen to participate in the contribution towards national
income and consequently in the appraisal of the national economy.
4. Willful evasion of tax or intentional avoidance would lead to prosecution by IT
Department.
5. If a person accrues losses in his business, he cannot carry it forward to set off against his
income in the next year if he does not file his return for the relevant previous year.
Advantages of Income Tax Return Filing
a. Return filing facilitates easy and speedy processing of housing, education, vehicle
loans etc. as banks would not provide any loan if the borrower has not filed his
return for three years even if it is a NIL return.
b. Return filing is mandatory for VISA processing.
c. Return filing facilitates quick registration of immovable properties.
d. Credit card will not be issued by the banks unless the applicant regularly files his
return.
e. Filing of return provides a standard proof of income of a person and helps to
establish a record with the tax department.
Consequences of Non-Filing of Income Tax Return
a. Losses such as business loss (speculative or non-speculative),capital loss(long
term or short term) and loss in race horse maintenance are not eligible to be
carried forward as per section 80 of the IT Act.
b. Filing of revised return u/s 139(5) of the IT Act cannot be facilitated if the
original return u/s 139(1) has not been filed.
c. Non filing of returns attracts penalty as follows of Rs. 5000 along with interest
u/s 234A, 234B, and 234C accordingly
In case you are of the opinion that the last date for filing, that is, July 31 is a far call now and you
could afford to rest, beware. It's always best to finish of this chore at the earliest so that you do
not get into the crosshairs of the last minute rush filers and make a mess of the tax return.
Begin your preparations and execute your return filing process as soon as possible.

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