What is Income Tax Return?
Income Tax Return is a proof that you have paid your income tax. It contains details about your annual income and the amount of tax you have paid. Every year, Indian citizens who earn taxable income have to file Income Tax Return (ITR). Filing ITR will help you in getting a refund in case you pay more tax than what you are required to pay. If you fail to file your ITR, you might have to pay penalty or face legal consequences.
ITR Filing Due Date A.Y. 2018-19(F.Y. 2017-18) :
The due date for filing ITR for 2018-2019 for Individuals/Body of Individuals (BOI)/Hindu Undivided Family (HUF) /Association of Persons (AOP) is 31st July, 2018. Individuals whose accounts need to be audited must file their IT Returns by 30 Sep 2018.
Benefits of Filing Income Tax Return Online
Though it might be a tedious process to keep a track of every nifty detail needed in order to file the proper details for the Income Tax Return, it actually helps a lot when it is done in the earnest and ahead of time, preferably, online –
1. Online filing of returns ends by July 31 or every financial year, and being a month or two in advance in filing the income tax returns actually ensures one encounters lesser traffic and the entire process goes much smoother.
2. In case one has missed filing tax returns for the previous year, every additional day till July 31 increases the penal interest. Thus, filing a tax return in advance is very advisable.
3. Creating a favourable financial history – Online filing of the income tax returns actually creates a history of your financial records with the tax department in a much faster and easier way. This history is favoured by a lot of organisations, be it financial or otherwise, whom you might have a business relationship with in the future.
4. Proof of financial record – Having an ITR-V form is always handy, since one can readily furnish the same as a proof for any kind of financial liability or opening a line of credit.
5. To carry forward losses – If you do not file returns, you will not be able to carry forward capital losses (short-term or long-term), if any, in a financial year to be adjusted against capital gains made in the subsequent years.
A long-term capital loss in one year can be carried forward for eight consecutive years immediately succeeding the year in which the loss is incurred. Long-term capital loss can be adjusted only against a long-term capital gain in the year.
6. Visa processing – If you are traveling overseas, foreign consulates ask you to furnish ITR receipt of the last couple of years at the time of the visa interview, says Rao. Some embassies may ask for ITR receipts of previous three years, while some others may ask for the most recent certificate.
This is especially true if you plan to travel to the US, UK, Canada or Europe, not so stringent for South East Asia or Middle East.
“Producing ITR receipts show that one has some source of income in India thus, strengthening your case as someone who will not leave the country for good but will return,” explains Rao.
When traveling to foreign countries, whether on a business or leisure trip, experts suggest you always carry income-related proofs along — salary slip, Form 16 and ITR receipts. Consulates specify these requirements in most cases.
7. Buying a high life cover – Buying life cover of Rs 50 lakh or Rs 1 crore has become commonplace. However, these covers are available against your ITR documents to verify annual income. “Life insurance companies, especially LIC, ask for ITR receipts these days if you opt to buy a term policy with sum insured of Rs 50 lakh or more,” says Sankla.
The sum insured one can get with a term cover depends on many factors one of which is the income of the insured. If an insured does not have a very high salary, he doesn’t need a higher insurance cover.
Experts say that if one plans to start their business and need to fill a government tender or two for the same, they will need to show their tax return receipts of the previous five years. This again, is to show your financial status and whether you can support the payment obligation or not.
However, this is no strict rule. It may vary depending on the internal rules of the government department. Even the number of ITRs required can vary.