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A Simplified Guide to Income Tax Return (ITR) Filing Process in India

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As per the Income tax rules and laws, every Indian citizen must pay tax on their income to the Indian government. Income Tax laws say that your income is taxed every year, no matter if you are an individual, an association, a company, an LLP, a local government, or a Hindu undivided family. Because of this, it is important to file your Income Tax return (ITR) every year. It’s up to you whether you want to file your income tax report online or in person.

What is an Income Tax Return?

An person of India is required to file a document known as an Income Tax Return (ITR) with the Income Tax Department of India in order to provide information regarding his income and taxes that are owed during the year in question. The information that is submitted in an income tax return (ITR) need to be appropriate for a certain fiscal year that begins on April 1 and ends on March 31 of the following year.

The income that you receive can come from a variety of sources, including but not limited to a salary, profits from a business, the sale of a house or property, dividends or capital gains, interest received, and other sources. The Department of Income Tax will issue a refund to you if you have paid more than the required amount of tax during the course of a year.

Is Filing ITR Compulsory?

According to Income Tax regulations, individuals who earn more than the tax-exempt threshold set by the Government are obligated to file their tax returns based on the applicable tax brackets for each year. Failure to submit your Income Tax Return (ITR) by the deadline may result in a penalty and could also hinder your chances of obtaining a loan or visa approval in the future..

Who is Required to File ITR?

Now that you know what an income tax return is, let us take a look at the list of people as well as enterprises that are mandated by law to file income tax return every financial year.

  • An individual who is less than 59 years old and has an annual income exceeding Rs. 2.5 Lakhs. Income calculation should be done without allowing deductions specified under Section 10 of the Income Tax Act.
  • An individual between 60 to 70 years of age (senior citizens) with an annual income surpassing Rs. 3 Lakhs.
  • Super senior citizens (80 years and above) with an annual income exceeding Rs. 5 Lakhs. Income calculation should be done without allowing deductions specified under Section 10 of the Income Tax Act.
  • An individual who wants to claim a refund on surplus income tax or tax deducted from the annual income.
  • An individual having assets or any other financial interest outside of the country.
  • NRIs (Non-Resident Indians) earning above the basic yearly exemption limit of Rs. 2.5 Lakhs.
  • A registered company with yearly income, regardless of whether it has made any profit during the period.
  • A company located outside of India with treaty benefits on transactions made within the country.

What Documents do you Need to File ITR?

When you begin the process of completing your income tax return, in addition to your salary stubs, the passbook for your bank savings account, your Aadhar card, and your PAN card, there are a few other papers that you will need to have in order to make the process of filing your taxes significantly simpler:

  • Form 16: It is provided by your employer and contains details of the salary paid by them to you and the Tax deducted at source (TDS) on it.
  • Form 16A: It contains details on TDS deducted on interest received from deposits such as fixed or recurring bank deposit.
  • Form 16B: If you sell a property, TDS applies on the amount received from you by the buyer, the details of which are present in this form.
  • Form 16C: TDS details of the rent paid by your tenant to you are recorded here.
  • Form 26AS: This form represents your comprehensive statement of taxes against the PAN number. It includes TDS by your employer, bank or any other organization that has made a payment to you. Advance taxes or self-assessment taxes paid, proof of tax saving investments such as deductions as prescribed from Section 80C to 80U including life insurance policy or a term plan are also listed.

How to File ITR Online?

If you have access to the internet, you can now have the ability to file your tax return from the comfort of your own home. Through the use of electronic filing, which makes use of tax preparation software that has been pre-approved by the Income Tax Department, this has been possible. Because of the many advantages that come with submitting tax returns online, an increasing number of taxpayers are doing so every year.

  1. Getting Refund: If you want to claim a refund of the amount that was deducted from the payment that was made to you for tax purposes and you want to do so, you will need to provide your income tax return for the current fiscal year in order for the refund to be completed.
  2. Verification Proof: Your annual income is used as the measure to determine whether or not you are eligible for a loan when you submit an application for one. The borrower is provided with a comprehensive image of your former income through the use of an ITR form that includes data of your earnings, which lends credibility to your application. Applications for visas, on the other hand, require proof of income, and the documents that are most commonly approved for this purpose are tax returns.
  3. Proof of Income: For the purpose of determining the amount of compensation that will be given to your nominees in the event of your death or disability, your insurer may demand your income tax return (ITR) when you purchase a term plan. The Individual Tax Return (ITR) is regarded as an evidence of income that may be formally verified for the purpose.

Benefits of Filing Income Tax Return

Filing Income Tax Return (ITR) in India offers several advantages, even if your income falls below the taxable limit. Here are some key benefits:

  • Claim tax refunds: If excess tax was deducted from your income at source (TDS) or you qualify for various tax rebates, filing ITR allows you to claim that money back. This can be especially helpful if you have made investments or paid medical bills that qualify for tax deductions.
  • Get loans easier: Banks and lenders often ask for ITRs as proof of income when assessing your loan eligibility. Timely filing of ITRs helps build a positive credit history, which can lead to better interest rates and loan terms.
  • Act as legal proof: ITRs are accepted as valid documents for address and income proof for various purposes, such as applying for visas, government tenders, or even renting an apartment.
  • Carry forward losses: If you experience business losses in a particular year, filing ITR allows you to carry those losses forward and offset them against your income in future years. This can help reduce your tax liability in those years.
  • Avoid penalties: Not filing ITR by the due date can lead to penalties and interest charges from the government. These penalties can be significant, so it’s important to file your ITR on time.

How to Check Your ITR Status Online?

After you have submitted your tax return, you can check its status online easily on the e-filing website of the Government of India. Depending on whether or not you have created a login account on the website, here are a few simple steps to check your ITR status:

  • Without login details: Click on the ITR status link displayed on the left of the website. It will direct you to a page wherein you need to fill details of your PAN number, ITR acknowledgement number and captcha code. Your tax filing status appears once you have keyed them in.
  • With login details: Login to the website using your username and password. Then, click on the ‘view returns or forms’ option. Select the assessment year and income tax returns from the dropdown menu. Post this, you can see whether your ITR has been verified or processed.

Why You Must File ITR Before 31st December 2024?

It will be more correct, to make sure that all the details of the accounts are true, the ITR returns on filing need much more attention. For avoiding errors one needs to check documents, tax statements, interest income certificates, etc. If one returns ITR then the chances of errors become lesser.

Payment Interest– the assessee who has to pay a tax of more than 1 lakh has to file earlier so as to increase interest payment on a monthly basis. Failure to file returns will levy a 1% interest for every month.

The loss will be moved forward: the Income-tax plan is to take ahead the losses from one fiscal year to another. although, taxpayers can avail of this if they file ITR before the expected last date.

Quick Refund: if the taxpayers file their return before November 30 then refunds can be processed who are waiting for the same. Earlier ITR filing may be confirmed before it gives quick tax rebates.

FAQ’s

What is ITR filing?

ITR stands for Income Tax Return. It’s a formal method wherein taxpayers declare their taxable earnings, deductions, and tax liabilities for a particular monetary 12 months to the Income Tax Department of India. Essentially, it’s a way for individuals and entities to file their profits and pay taxes for that reason.

What files are required for submitting ITR?

Several documents are critical for submitting an Income Tax Return (ITR) in India. These consist of your Permanent Account Number (PAN) card, Aadhaar card, Form 16 (supplied through your business enterprise), bank statements, Tax Deducted at Source (TDS) certificate, info of investments, assets files, and any other relevant financial information. Having those documents geared up guarantees correct reporting of your income and deductions.

What are the different ITR forms, and how do I know which one to use?

The Income Tax Department presents numerous ITR paperwork tailored to one of a kind varieties of taxpayers and earnings sources. For instance, ITR-1 is for salaried individuals with profits from profits, one residence property, and interest profits. On the opposite hand, ITR-4 is for individuals and Hindu Undivided Families (HUFs) with profits from business or profession. To determine the precise shape, determine your earnings assets and financial sports.

Can I report ITR online?

Yes, you may report your Income Tax Return (ITR) on-line through the Income Tax Department’s professional internet site or thru authorized e-filing intermediaries. Online filing gives comfort, safety, and faster processing compared to standard paper filing. It involves filling out the specified bureaucracy electronically, attaching applicable documents, and filing them digitally.

How can I rectify mistakes in my filed ITR?

If you find out errors or omissions in your filed Income Tax Return (ITR), you can rectify them with the aid of filing a revised go back within the prescribed time body. To try this, you want to pick the choice of ‘Revised Return beneath Section 139(5)’ at the same time as submitting online or publish a revised paper go back. It’s important to accurate any inaccuracies to ensure compliance with tax guidelines.

How can I check the status of my filed ITR?

You can without difficulty take a look at the fame of your filed Income Tax Return (ITR) online through the Income Tax Department’s e-submitting portal. After logging in in your account, navigate to the ‘My Account’ segment and select ‘View Returns/Forms’ to music the repute of your filed returns. This lets in you to stay updated at the processing of your go back and any similarly actions required.

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Easy Guide to Verifying Your Income Tax Return

by ITR Filing

Online ITR Verification

Online ITR Verification is a crucial component in the ITR submitting procedure. Failure to comply with this requirement within a period of 30 days from the ITR submission date will result in the income tax department rejecting your return.

By utilizing the “e-verify return” function introduced on the homepage of the income tax department, taxpayers are now able to electronically validate their income tax returns without the need to enter into the e-filing portal. We have described in detail the definition of ITR verification, the methodologies, and the step-by-step process for e-verifying ITR in this guide.

What is ITR Verification?

The income tax department receives your ITR but does not initiate processing (or verification) until you submit it. Processing does not commence until the return has been validated. The term for this procedure is ITR verification.

The new regulation specifies that ITR verification must be completed online within thirty days of ITR submission. This time restriction was previously 120 days. This newly implemented regulation becomes valid for returns submitted on or after August 1, 2022. The deadline for taxpayers who submitted their income tax returns prior to July 31, 2022, to e-verify their ITR, continues to be 120 days.

The Department of Income Tax has implemented a streamlined electronic verification process for income tax returns. You are no longer obligated to log in to your income tax portal under this revised procedure. Previously, in order to e-verify their return, taxpayers were required to check in to the e-filing portal, a process that consumed a considerable amount of time. To learn more, please continue reading:

How to ‘e-verify’ the ITR without logging into the e-filing portal?

You can e-verify your Income Tax Return (ITR) without logging into the e-filing portal using various methods, including:

  1. Aadhaar OTP: You can use the One Time Password (OTP) generated on your registered mobile number linked to your Aadhaar card to e-verify your ITR.
  2. EVC Generated Through Bank Account: You can generate an Electronic Verification Code (EVC) using your pre-validated bank account linked to your Income Tax PAN.
  3. EVC Generated Through Demat Account: You can generate an EVC using your pre-validated demat account linked to your PAN.
  4. EVC Generated Through Bank ATM: You can generate an EVC using your ATM card at any participating bank.

Here’s a step-by-step guide on how to e-verify your ITR using Aadhaar OTP:

  1. Visit the e-filing portal of the Income Tax Department of India: https://www.incometax.gov.in/IEC/foportal
  2. Click on the “e-Verify” tab.
  3. Select the “Instant e-Verify using Aadhaar OTP” option.
  4. Enter your PAN, Aadhaar number, and the acknowledgment number generated while filing your ITR.
  5. Click on “Continue.”
  6. An OTP will be sent to your registered mobile number linked to your Aadhaar card.
  7. Enter the OTP received and click on “Validate.”
  8. Your ITR will be successfully e-verified.

Here’s a step-by-step guide on how to e-verify your ITR using EVC Generated Through Bank Account:

  1. Visit the e-filing portal of the Income Tax Department of India: https://www.incometax.gov.in/IEC/foportal
  2. Click on the “e-Verify” tab.
  3. Select the “Generate EVC through Pre-validated Bank Account” option.
  4. Enter your PAN, select your bank from the list of participating banks, and enter your bank account number.
  5. Click on “Continue.”
  6. A confirmation message will appear. Click on “OK.”
  7. Log in to your pre-validated bank account’s net banking or mobile banking platform.
  8. Select the “e-Verify Tax Payment” option.
  9. Enter your PAN and the acknowledgment number generated while filing your ITR.
  10. Click on “Submit.”
  11. An EVC will be generated and displayed on your screen.
  12. Return to the e-filing portal and enter your PAN, the acknowledgment number, and the EVC generated from your bank.
  13. Click on “Submit.”
  14. Your ITR will be successfully e-verified.

Offline Income Tax Return – Processes

Verifying your income tax return offline is a process of sending a physical copy of your ITR-V form to the Centralized Processing Center (CPC) of the Income Tax Department. This method is only available for those who cannot verify their ITR electronically.

Here are the steps on how to verify your income tax return offline:

  • Download the ITR-V form from the e-filing portal.
  • Print the ITR-V form in blue ink.
  • Sign the ITR-V form in blue ink.
  • Attach a self-addressed, pre-stamped envelope with the ITR-V form.
  • Mail the ITR-V form to the following address: Centralized Processing Center, Income Tax Department, Post Box No. 1, Bangalore – 560001.

Why should you verify ITR?

There are several reasons why you should verify your income tax return (ITR). Here are some of the most important ones:

  1. To validate your ITR and ensure that it is complete and accurate. When you verify your ITR, you are essentially signing off on the information that you have provided. This can help to prevent any errors or omissions from being missed.
  2. To expedite the processing of your refund. If you are entitled to a refund, verifying your ITR can help to speed up the process of receiving your money. This is because the Income Tax Department will be able to process your refund more quickly once they have confirmation that your ITR is valid.
  3. To minimize the risk of an audit. The Income Tax Department is more likely to audit taxpayers who have not verified their ITRs. By verifying your ITR, you can help to reduce the chances of being audited.
  4. To comply with the law. It is your legal obligation to verify your ITR within 120 days of filing it. Failure to do so could result in penalties.

Conclusion

Verifying your income tax return (ITR) is a crucial step in assuring the accuracy and completeness of your tax return. Additionally, doing so facilitates the refund processing, reduces the likelihood of an audit, and ensures legal compliance.

E-verification via net banking or mobile banking, e-verification via Aadhaar OTP, or mailing a hard copy of your ITR-V form to the Income Tax Department are all viable methods for confirming your ITR.

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Simplified Guide to Income Tax Returns for Salaried Individuals

by ITR Filing

Filing income tax returns is an important financial responsibility for salaried employees. As per the Income Tax Act, 1961, ITR filing is mandatory wherein a taxpayer reports his total income in a financial year and net tax liability and claims tax deductions using an ITR form. The ITR filing process has been simplified by the Income Tax Department through its e-filing portal. In this article, we explain how salaried employees can file their income tax returns online.

Who should file ITR?

People with an annual income of Rs. 2,50,000 and more must file their ITR as per the new tax regime. There are no higher exemption limits for senior citizens and super senior citizens i.e., those above 80 years of age. Under the old tax regime, the exemption limit was Rs 2.5 lakh for individuals below 60 years, Rs 3 lakh for senior citizens between 60 to 80 and Rs 5 lakh for super senior citizens.

The following individuals must file their ITR:

A person earning income from more than one income source, such as investments, residential properties, capital gains, etc.

  • Those with investments or earnings through foreign assets
  • Those having over one crore rupees of deposits in current accounts of one or more banks
  • If an individual has paid over Rs 1,00,000 as electricity charges in a year
  • If one has made a payment of over Rs 2,00,000 on foreign travel for a person who may or may not be a family member

How to file income tax returns online for salaried employee

Here is a step-by-step guide for filing income tax returns online:

Step 1: Visit the Income Tax Department’s e-filing portal https://eportal.incometax.gov.in/iec/foservices/#/login

Step 2: Sign in to the portal by entering your user ID (PAN No.), password and Captcha code. First time users can register using their Permanent Account Number.

Step 3: Go to ‘Income Tax Returns’ under the ‘e-File’ tab. Click on ‘File Income Tax Return’.

Step 4: Choose the assessment year from the drop-down. Select online as the mode of filing. 

Step 5: Choose and download the relevant income tax return (ITR) form. Salaried employees can choose form ITR-1, ITR-2 or ITR-3.

Step 6: Choose the filing type as ‘Original’ if not filing for a revised return.

Step 7: Select the submission mode of ‘Prepare and Submit Online’. Click on ‘Continue’.

Step 8: Provide the relevant details in the ITR form. Add information about tax payments through TDS, TCS and advance tax. Click on ‘Save The Draft’ to keep saving the changes.

Step 9: Calculate the tax payable and pay the tax. Enter challan details in the tax return. If you do not have any tax liability, skip this step.

Step 10: Check and confirm the details provided in the form and submit the form.

How to file an income tax return online for salaried employees for the first time?

Those filing their returns for the first time should register themselves on the official e-filing portal.

  • Visit the website https://www.incometax.gov.in/iec/foportal
  • Click on ‘Register’
  • Click on ‘Taxpayer’
  • Submit your PAN details. Now, click on ‘Validate’ and then click on ‘Continue’
  • Enter your name, address, gender, etc.
  • Provide your email ID and registered mobile number
  • Once you have filled the form, click on ‘Continue’
  • An OTP will be sent to your mobile number and email ID.
  • Enter the OTP. You will be redirected to a new window where you must verify the details.
  • If there are any errors, you can edit it. Another OTP will be sent to validate the changes.
  • Set up your password and login message.
  • Click on ‘Register’. You will receive an acknowledgement message.
  • Now, login to the portal and complete the steps for income tax return e-filing.

What Documents are Required for Filing ITR for Salaried Person?

Filing ITR-1 requires certain government-issued documents. These are: 

  • Pan card
  • Aadhaar card
  • Bank statement/Passbook
  • Form 16
  • Salary slips
  • Form 26AS
  • Form 16A 
  • Exemptions under Section 80D and 80U
  • Capital gains statement
  • In addition to these, you will require an income tax login ID and password.
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How to check income tax refund status?

by ITR Filing

Filing Income Tax Return (ITR) is an annual obligation for taxpayers, and for many, a welcome outcome is the anticipation of an income tax refund. Generally, ITR refunds get credited to the connected account automatically, but sometimes, they get delayed.

Amit Gupta, founder and CEO of SAG Infotech, says, “To simplify this process, taxpayers must stay informed about their ITR refund status. Understanding the steps to check the status of your ITR refund can bring clarity and peace of mind during this period.”

“Taxpayers need not run around to check ITR refund status. They can visit the official Income Tax website and, after logging into it, check the ITR refund status. You can even check the status without login to the portal,” he added.

What is an income tax refund?

When a taxpayer makes an excess payment of income tax to the government against its actual income tax liability for a given year, the income tax department refunds the excess amount paid after due assessment. This refunded amount is known as an ‘Income tax refund’.

When can you claim an income tax refund?

The following are situations when an income tax refund can be claimed:

Excess TDS deducted

  • After reviewing the employee’s documentation for things like 80C investments, 80D medical insurance premiums, etc., the employer will often deduct taxes. But there are times when an employee won’t have enough time to gather the necessary paperwork to prove a couple of these investments before a fiscal year ends. So, the company decides to take a bigger cut. But the good news is that when the employee files their income tax return, they may deduct the return on investment and get their money back,
  • If someone’s income is less than Rs 2.5 lakh, they might not even be subject to taxes. Therefore, they would be exempt from paying taxes. There was still the matter of taxes withholding from their earnings. They can therefore request a return of the overage tax;

Your interest income was reduced by an excess TDS deduction.

Banks are authorized to deduct TDS from interest accrued on bonds or fixed deposits if the interest amount exceeds the threshold limit stipulated in the Income Tax Act. This deduction is often made at the time of interest payment. However, if this deduction exceeds the actual tax liability, you can claim a refund for the excess TDS deducted.

Overpayment of advance taxes

If you paid more advance tax than your actual tax liability for a particular fiscal year, based on self-assessment, you can claim this excess advance tax as a refund when you file your ITR. Advance tax is paid in installments throughout the financial year, and the final tax liability is calculated at the end of the year. Any excess advance tax paid can be claimed as a refund.

Taxes paid due to adjustments made by income tax officers

During income tax proceedings, income tax officers may add various amounts to a taxpayer’s income. However, these adjustments may be removed by appellate authorities. In such cases, the taxpayer is entitled to a refund for the excess taxes paid due to these adjustments.

Double taxation

Double taxation occurs when income is taxable in two or more countries. This situation can arise when an individual is a citizen of one country but earns income in another country. India has signed Double Taxation Avoidance Agreements (DTAA) with numerous countries to address this issue. Under these agreements, individuals can claim a tax refund if they are Indian non-residents and their income is subject to taxation in another country. The DTAA agreement allows them to receive a refund for any excess tax paid.

Key information regarding the income tax refund

  • Make sure the bank account information you want the refund credited to is prevalidated.
  • To ensure that your income tax refund is processed quickly, submit your ITR before the deadline.
  • Please download your form 26AS and check that it reflects the excess amount of tax that you have paid.

How to Check Income Tax Refund Status through E-Filing Website?

Follow the given steps to get refund status via E-Filing Website:

Step 1: Visit the official e-Filing portal.

Step 2: Log in with your User ID/PAN/Aadhar

Step 3: Enter the ‘Captcha code’ displayed on the screen.

Step 4: Navigate to the ‘My Account’ section.

Step 5: Click on the ‘Refund/Demand Status’ option.

Step 6: The status of your income tax refund will be displayed with following Details:

  • Assessment Year
  • Status
  • Reason on Refund Failure and
  • Payment Mode.

What are the possible reasons for the delay in getting a tax refund?

Refunds may be delayed for a number of reasons. We could enumerate a few causes for the return delay, including:

  • Income tax return non-verification: If the return is filed but not confirmed, it is incomplete. Thus, after filing your return, make sure your ITR is confirmed within 120 days. Verification of returns submitted on or after August 1, 2022, is required within 30 days. The refund will be issued later, the later you check.
  • Manually filing an income tax return could result in a longer processing time for the refund than e-filing one online.
  • Last but not least, if the income tax agency suspects any underreporting of income, they may examine the return, which could account for the refund delay.

FAQs on Income Tax Refund Status

Will I receive any compensation if the processing of my income tax refund has been delayed?

Yes, you will receive 0.5% interest per month or a portion of the monthly interest on the amount that was due if your income tax refund is delayed. This interest will be computed starting on April 1st of the assessment year and continuing until the day your refund is issued.

When can I expect to receive a refund of my income taxes?

If you have paid more in taxes than what is really owed, you are qualified for an income tax refund. The amount of the refund will be computed at the time the ITR is filed.

How long do you have to file a claim for a refund of income taxes?

Only after completing the ITR filing process may one get an income tax refund. The 31st of December is the deadline for submitting IT returns and getting reimbursements for any AY.

How much time does it take for the account to display the income tax refund?

The income tax refund typically takes 30 to 45 days to appear in the account.

Can I check the status of my income tax refund online?

It’s possible to monitor the status of your income tax refund online. 

What distinguishes an income tax refund from an income tax return?

Your income tax return provides your income and tax information on a yearly basis in the designated ITR forms. On the other hand, when the amount of taxes paid exceeds the amount owed, money is either owing or received as an income tax refund. The refund is only claimable after the return has been lodged successfully.

Who should I get in touch with if I have any questions about my refund of income taxes?

If you have any questions about income tax refunds, you can contact [email protected] via email or by calling 1800-180-1961.  

Does the amount of my refund require tax payment?

The excess tax that you have paid will be matched by your income tax refund. This is not taxable and does not qualify as income. That being said, you will be taxed on the interest you earn on your income tax refund.

Does receiving a refund of income taxes require filing taxes?

Yes, you must file an income tax return for the assessment year in order to receive your refund of any excess tax you paid during the financial year.

Is there a maximum amount of times that amended returns may be submitted?

There is a one-year expiration limit, although the returns can be filed more than once.

Our team of experienced tax consultants is here to assist you with the entire income tax refund process, ensuring you receive the maximum refund you are entitled to.

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Explore the Benefits of Filing Your Income Tax Return

by ITR Filing

Recently, the Government has introduced an ‘Annual Information Statement’ that summarizes all financial transactions, including bank interest, share market transactions, and real estate transactions, in a single document. This statement captures all transactions that have come to the Government’s attention, making it advisable for NRIs who conduct financial transactions in India to file their tax returns annually to prove their ‘non-resident’ status in India for each tax year.

Income Tax Law mandates that every individual must file an income tax return in India if their total income exceeds the basic exemption limit. For NRIs, submitting an income tax return in India is only mandatory if their total income for the previous year has exceeded the maximum amount not chargeable to tax. The threshold limit for Financial Years 2020-21 and 2021-22 for individual tax slab exemption is INR 250,000.

The benefit of carrying forward losses (capital loss, business loss, etc.) for set off against future income will only be available to individuals who have filed ITRs within the prescribed due dates.

Eligibility for availing loans, credit cards, and term insurance policies is often determined by a multitude of factors, among which previously filed tax returns are often mandatory as they are considered proof of the quantum and source of income.

Benefits of Filing Income Tax Returns on Time in India

For Startup Funding

Financial institutions may need several years of returns before supporting your firm. Your business income tax return can help financial institutions and investors determine your business’s scalability, profitability, and other cost characteristics to guarantee their investment is well-placed. It also certifies tax-paying citizenship.

Getting Government Tenders

Contractors may have a solid track record of winning significant service or works contracts, but if they don’t file tax returns on time or at all, they may face serious consequences. It may hurt their business.

Contractors must file these returns on schedule, properly, and audited if necessary. When applying for a government tender, this is crucial. The tender scrutiny committee may inspect this work, and the last five to seven years’ ITR is usually checked.

Prevent Sanctions: 

Businesses and individuals can avoid large fines by filing ITRs on time. After the deadline, you may be penalized INR 5,000 for filing your ITR late. It supplements other Act interests. You may also have to pay penalty interest.

Credit Card Request

Almost everyone wants a credit card, regardless of their career. If additional income proofs are missing, an income tax return is essential. Through CIBIL, ITR helps determine a taxpayer’s credit history.

Visa Application

Most countries require ITR for visas. This informs Visa processors about your finances and income. The embassy will check the applicant’s income and ability to pay. Foreign consulates often request three years or the current year’s income tax returns. If you want to visit, invest, or work in the US, UK, Canada, Europe, or South East Asia, you must return.

Loan Application Eligibility

Regular ITR filing shows stable income and timely tax payments. Financial organizations use applicants’ prior year ITRs to approve loans, overdrafts, bank credit cards, cash credits, and bill discounting alternatives. The lender/bank may reject your house loan application if you cannot provide required papers, including ITR.

Losses carry forward

To carry forward losses from capital asset sales, business losses, etc., taxpayers must file a tax return before the due date. You can balance a profit from selling mutual funds or stock with losses from past years by filing tax returns on time.

If tax returns are late, unadjusted losses (with limited exceptions) cannot be carried over. Thus, a tax return is needed to carry forward and modify losses.

Protecting against Black Money

The Indian government has taken many initiatives to combat black money and prevent money outflows in recent years. The government required taxpayers to disclose foreign assets in their 2011-12 income tax filings to achieve this goal. Even if you don’t own overseas assets and file your income tax return on time, the IT department won’t consider your savings black money because any income not declared is black money.

Buying High-Coverage Insurance

Life insurance policies costing Rs 50 lakh or Rs 1 crore are common. Life insurance firms, primarily LIC, require ITR receipts for term policies over Rs 50 lakh. Term policies’ amounts are decided by numerous factors, including the insurer’s income.

Growth of Nation

Tax returns can greatly affect a nation’s development. More money entering the country implies more government revenue, which means more infrastructure improvements. The Indian government collected 9.60 lakh crore in direct taxes in FY2022. Infrastructure and national development projects benefited from this money.

Accidental Claim

Filing ITRs for yourself or your spouse will aid you in case of an accident. Income verification is used by insurance firms to compute claims. Because the court takes ITR as the only evidence, missing returns, especially from the recent three years, may diminish or deny the claim.

The government must also reimburse the relatives of a three-year income tax filer who dies in a traffic accident. Compensation can reach three times the deceased’s typical income.

To log in to e-filing in India, you will need to follow these steps:

  1. Go to the e-filing website at https://eportal.incometax.gov.in/.
  2. Click on the “Login” button in the top right corner of the screen.
  3. Enter your PAN in the “Enter your User ID” textbox and click Continue.
  4. Confirm your Secure Access Message. Enter your password and click Continue. On successful validation, the e-Filing Dashboard is displayed.

If you have forgotten your password, you can click on the “Forgot Password?” link on the login page. You will then be asked to enter your PAN and email address. The system will then send you an email with a link to reset your password.

Conclusion

The process of navigating the environment of taxes may appear to be intimidating, but it is a responsibility that every taxpayer must fulfill. The filing of your income tax return is not only a legal requirement; it is also a proactive move toward achieving financial transparency, which can unleash a world of benefits that can improve your overall financial well-being. Reach out to us for any questions or concerns you may have regarding the filing of your income tax return.

Our experienced team of tax professionals can help you navigate the complexities of tax filing and ensure that you are compliant with all applicable regulations. We will work closely with you to understand your unique financial situation and develop a customized tax filing plan that maximizes your deductions and minimizes your tax liability.

Are you looking for a professional e-filing service provider? If so, you’ve come to the right place. We are one of the leading e-filing service providers, and we have served over 10,000 valuable clients in various industries across the globe. We are always ready to provide you with the professional support you need.