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A form in which taxpayers declare their income details, tax payable on their income, exemptions, and deductions for a particular financial year is known as an income tax return. There are several reasons why taxpayers must file ITR, the primary reason being claiming tax deductions. However, every individual doesn't need to file ITR.
To explain the benefits of filing ITR and clarify other doubts of a taxpayer, we present a comprehensive guide on income tax returns and their importance. We will cover every detail related to ITR benefits, for whom it is mandatory to file ITR, and the consequences of not filing the same.
Thus, without any delay, let's begin!
Not everyone needs to file ITR mandatorily. Based on certain factors, taxpayers can decide whether it is necessary for them to file ITR. Those factors are mentioned below:
Registered Companies Generating Income- All the registered companies that generate income, regardless of the fact that they have made any profit or not throughout the financial year.
Claim Refund- Those who are willing to claim a refund on the excess tax that has been deducted or the income tax they have paid must file IT returns.
Foreign Companies and NRIs- Foreign companies enjoying treaty benefits on their Indian transactions need to file an ITR return. Additionally, NRIs who earn more than ₹ 2.5 lakhs in a single financial year also require filing ITR returns.
This is why income tax return filing is important.
It is advisable to file tax returns before the due date to claim the benefits of ITR. Generally, the due date of filing income tax returns is 31st July for non-audit cases and individuals and 31st September for audit cases in a particular financial year.
The benefits of filing income tax returns vary across taxpayers. Depending on the category of taxpayer, we have enlisted the advantages of filing ITR in the following section.
In addition to this, one can file a NIL income tax return in case his/her yearly earnings fall below the taxable slabs. There are several benefits of filing NIL income tax returns. Some of them are –
ITR should also be filed for deceased individuals if they pass away in the middle of a financial year. It is calculated on earnings generated till their date of death.
In such a case, their legal heir should file the IT returns. This is important because insurance companies need income proofs to sanction an amount for an accident during court trials. Therefore, by presenting the ITR receipts, one can easily obtain the claim amount.
Now that you know about the advantages of income tax return filing, here are some consequences they may face if they fail to file it:
However, there are some individuals who are not required to file an income tax return. Senior citizens above 75 years can get full exemption from ITR filing as per the Finance Minister's announcement in the Union Budget 2021. (Source: 1).
By going through this comprehensive guide on the benefits of filing ITR, one can acknowledge the advantages of e-filing tax returns and applying for the same without any delay.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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