Why Income Tax Return Filing is mandatory ?

Income tax is a type of tax charged by the government on the basic income earned by an individual or business during a financial year.  Income tax is a source of revenue for the government. The funds collected from this are used for public services, pay government obligations and provide goods and services for citizens. Income Tax Return is mandatory to file for a taxpayer.

What is Income Tax Returns ?

Income Tax Return(ITR) is nothing but a form which is submitted by an individual to an income tax department. This form contains the information about the person’s income and the taxes to be paid.

Why is it mandatory to file ITR ?

Yes, it is very crucial to File ITR. If you are not Filing ITR then it will not only cause penalties but also be dangerous for you to get a loan or visa. A lot of individuals think that ITR Filing is not necessary but everyone should have to know the value of Filing ITR. Everyone must understand that Filing Income Tax Return is an annual activity as well as social duty. There are several reasons why you should File ITR :

1. A Taxpayer can claim tax deduction : A taxpayer can get a chance for deduction in a tax amount. The Income Tax Act permits a taxpayer to request multiple deductions under several sections to reduce tax. It is very much important for a taxpayer to File Income Tax Returns to claim this offer of IT Department.
2. A Taxpayer can claim tax refunds : In most of the cases, when TDS gets subtracted on your income, a taxpayer is allowed to get a refund from the IT Department if the tax amount deducted is higher than the total taxes. You can take advantage of this offer if you are Filing Income Tax Return within a due date. 
3. Help to avail a loan  :When it comes to apply for a loan banks will check your previous finances. If you have File IT Return on a regular basis then it will act as a proof for your income. If you are applying for a home loan, car loan or credit card then financial institutions ask to see your IT receipts for the previous years. Insurance companies also ask to show your IT receipts when you are buying term insurance of a huge amount.
4. Help to adjust capital gains and losses : According to the Income Tax Act, capital losses can be adjusted against capital gains. To avail this offer of IT Department you should have to File Income Tax Returns. Also if you are Filing your income tax returns regularly and if you have a capital loss, then you can forward it for 8 consecutive financial years.
5. Makes you a responsible citizen : According to the IT Act, an individual who earns a specific amount of money every year should have to file an income tax return. If you fail to do this then you will charge by the penalties. If you are filing IT Returns, then it is the sign that you are a responsible citizen. You are helping the government for the betterment of the country.

Important Factors to be considered before Filling ITR :

1. Choose the correct ITR form.
2. Choose a new tax regime or old tax regime according to your benefits.
3. Pre Filled ITR forms.
4. Verify the pre-paid taxes with Form 26AS.
5. Payment of balance taxes.
6. Consequences of non-filing of ITR by due date.
7. Change of employment during the year.
8. Reporting Exempt income.
9. Various disclosure requirements.

General FAQs regarding Income Tax Returns

1. What is Income Tax ?

Income tax is a type of tax charged by the government on the basic income earned by an individual or business during a financial year.  Income tax is a source of revenue for the government. The funds collected from this are used for public services, pay government obligations and provide goods and services for citizens. Income Tax Return is mandatory to file for a taxpayer.

2. How will I know how much Income Tax I have to pay ?

The rate of income tax is accessible in the Finance Act passed by the Parliament every year.

3. Who is supposed to pay Income Tax ?

Income Tax is to be paid by every person. Person can be an individual, Hindu Undivided Families(HUFs), Association of Person (AOPs), Body of Individuals(BOPs), Firms, Companies and any Local Authority. 

4. How does the Government collect Income Tax ?

There are three ways by which the Government collects tax from the taxpayer : a) Spontaneous payment by taxpayer in banks like Advance Tax and Self Assessment Tax. b) TDS from the income of the receiver. c) Taxes collected at source(TCS).

5. From where I can get help in the matters of Income Tax issues ?

A taxpayer can take the help of any tax professionals or Public Relations Officer(PRO) in the local office of the Income Tax Department. A taxpayer can also take the help of Tax Returns Preparers.

6. How to deposit Self Assessment Tax or Advance Tax to the credit of the Government ?

By using the Challan i.e., ITNS 208 Self Assessment Tax or Advance Tax can be deposited to the credit of the Government. This challan can be downloaded from the website of www.incometaxindia.gov.in.

7. Do I need to maintain any records or proof of earning ?

Yes, you have to maintain it.

8. Is my income taxable if I am an agriculturist ?

No.