In India, every assessee, whether having taxable income or not, is required to file an income tax return.
Income tax is a direct tax paid to the government on an assesse’s income. Any person eligible to pay income tax can file Income Tax Returns when his total income from all sources exceeds the basic exemption limit.
The reasons to file income tax returns are listed as follows:-
- Financial Record
Filing your income tax return every year enables the Income Tax department to keep a record of one’s financial transactions.
- Availing Loans
Income Tax Returns act as a record to be placed before banks at the time of taking loans and availing financial assistance.
ITR includes details of one’s income and TDS deducted. Therefore, if tax deducted is more than the tax liability, refund is received from the IT department based on the information furnished in the ITR.
- Avoid Penalty
In case a person fails to file his/her ITR within the assessment year, he will be liable to pay penalty of INR 5000 along with interest under section 234A.
- Applying for VISA
Filing your ITR is mandatory in case of applying for a VISA for foreign travel.