Why is Income Tax Filing Important?

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Why is Income Tax Filing Important?

Filing of return provides legality to what we are earning whether we are paying tax on it or not. Prompt payment of taxes and filing of returns is less likely to attract attention of the IT Department. Accordingly, filing of returns is significant in many ways as follows:

  • A mandatory concept has been introduced for every person to file his return even if it is below the exemption limit, no matter what.
  • Any transaction can be legally entered into because the government is having records of the income and it is collecting tax on it.
  • Payment of taxes helps every citizen to participate in the contribution towards national income and consequently in the appraisal of the national economy.
  • Willful evasion of tax or intentional avoidance would lead to prosecution by the IT Department.
  • If a person accrues losses in his business, he cannot carry it forward to set off against his income in the next year if he does not file his return for the relevant previous year.

Advantages of Income Tax Return Filing

  • Return filing facilitates easy and speedy processing of housing, education, vehicle loans etc. as banks would not provide any loan if the borrower has not filled the return for three years even if it is a nil return.
  • Return filing is mandatory in VISA processing.
  • Return filing facilitates quick registration of immovable properties.
  • Credit card will not be issued by the banks unless the applicant regularly files his return.
  • Filing of return provides a standard  proof of income of a person and helps to establish a record with the tax department.

Consequences of Non-filing of Income Tax Return

  • You will be issued notice u/s 142(1) for non-filing of income tax return by the IT Department
  • Losses if any during the year, would not be allowed to carry forward. Normally, if you file your return on time losses of this year can be set-off against gain of forthcoming years.
  • A Penalty of Rs. 5,000 may be imposed under section 271F if belated return is submitted.
  • Interest u/s 234A at the rate of 1% per month/part of the month would be charged.

To File your Tax Returns you can Contact us at 09313368533

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