Introduction
What is an ITR? Everybody knows what is an ITR. But the question is do every person know full details about ITR? The full form of ITR is ‘Income Tax Return’. Every person who is eligible to pay tax to the government is supposed to pay to the Income Tax Department of India. It also has its Act called ‘The Income-Tax Act, 1961’and the ‘Income Tax Rules, 1962’ enacted by Parliament in the Twelfth year of the Republic of India. A person is supposed to give all the details of his/her income while filing ITR, from where it came, it simply means the sources of income and the taxes that are to be paid in accordance with his/her income annually at the end of the financial year. ITR is a kind of citizen’s right that every citizen must utilize to get its benefit.- Advantages of Income Tax Return Filing –
Bank Loan Approval: Every person used to get a loan from the Bank. However the procedure or steps for approval of a Bank loan differ from a person’s profession or job he/she holds. Regarding the approval of loans for those who work in the private sector, banks demand or require the last three years’ Income Tax Returns. Because it forms a record of all the Income sources of the particular person who wants to take a loan. Otherwise, the Bank does not have any record of processing the loan. The bank could build trust for the said person after looking at the ITR which shows all the sources of Income and the Tax paid by the person who wants a loan. It also gets an offer of a lower interest rate with a higher amount of loan.
Can claim Income Tax Refund: A person whose Tax Deducted at Source (TDS) or self-assessment tax payment has made more than his actual liability, can be easily claimed by filing his/her Income Tax Return during the financial year. A person will get Interest in the refund amount if happens to file ITR before the date-line. Nowadays there are also available online platforms for filing ITR. Proper verification is done when the person files ITR only then the appropriate refund will be done. If there happen to be any incorrect details on the ITR then no refund will be done.
Visa Approval: While applying for a visa, income proof is mandatory and the rules for applying differ from Country to Country. It is not compulsory to file ITR but to show as income proof became mandatory. So, applying for a VISA helps in quick approval for a VISA application when showing ITR as income proof.
Assist in getting a Scholarship for your Offspring: During the academic period for children, there came various types of scholarships. Which helps in their financial problems for academic study expenditure. So, for such scholarship applications, there are certain criteria, in such criteria if happen to show income proof for parents. Then there came ITR for showing as income proof for parents in applying for scholarships for availing the benefits.
Helps in claiming compensation under the Motor Vehicles Act: Under this Act, compensation can be claimed by the deceased representatives or severely injured party by filing a petition under the concerned jurisdiction Tribunal. When filing a case Court demands the annual income for the deceased or severely injured person. So, if a person happens to file ITR before the incident occurs, it makes it easier to show his/her income and further helps a lot in claiming his/her compensation.
- Disadvantages of not filing Income Tax Return –
The penalties regarding non-filing for Income Tax Return used to differ or vary from a person’s sources of Income. Let’s say, a person wants to claim his/her Income Tax Refund after wrongfully deducting the taxes from his/her income. Then he/she cannot claim the said refund because of a non-filing Income Tax Return for the past years.
If the Income Tax Department happens to find out for not filing an Income Tax Return. Then a notice shall also be issued against the particular person. Regarding the penalties, the fines are also levied by the Income Tax Department, and a person shall undergo imprisonment for not filing an Income Tax Return.
Sections used for penalties under the Income Tax Department were as follows
Section 234 F – If a person fails to file his tax on time. Then he/she must be paid the Tax along with the fine.
Section 234 A – Under this section it levied a simple interest of 1% for every month for delay in filing Income Tax Return.
Section 271 H – A penalty shall be levied under this section if a person fails to file the statements for Tax deducted within the time prescribed.
Section 270 A – A penalty shall be levied in addition to Tax paid if happen to found any under-reporting and misreporting of income is found by the Income Tax Department.
So, these are the sections that were utilized by the Income Tax Department according to their concern reaction of the particular person.
Conclusion One must not consider a burden for filing Income Tax Returns instead one must consider a citizen’s right which all must take the good opportunity provided by the Government. Every person who is liable to pay Tax shall pay under the prescribed period and should avail of the advantages regarding a loan, scholarship, accident claim, TDS, etc. One should not wait for the penalties, issuing notice, higher Tax rates, imprisonment, etc. for not filing the said Income Tax Return.