Today we are going to learn about ITR i.e. Income Tax Return. What is an Income Tax Return, why is it necessary to file, who should file it, what are the benefits of filing ITR? Today we are going to understand all these points.
First of all, the long form of ITR is Income Tax Return and it means that when you have a specific income, then you have to pay the tax which is there to the government.
What are the benefits of filing Income Tax Return?
There are many benefits by filing ITR but we will see 10 benefits of filing an Income Tax Return, which we are going to look forward to
Claiming Deduction In
In order to claim the income that the ITR department gives us, we need to fill out the Income Tax Return. If someone is salaried and if he has taken Life Insurance (LIC) policy and if he has to claim that health insurance ITR is helpful to claim it. The same are other deductions of ITR. If he wants to claim it, then he will have to file an Income Tax Return.
The same happens in business returns as if someone’s income is not crossing 5 lakhs then there is no need to pay tax. Because under section 87A we get a rebate of 12500 and if we want to take this rebate then we have to file ITR.
Set Of Losses or Carry Forward Losses What is
Set of Losses or Carry Forward Losses. Let’s understand that we had some losses last year, now that loss will be like if you sold the house or invest in mutual funds, and then you get loss or invest in the stock market and that you get loss, and If you want to carry forward the losses, then you will have to file ITR.
Understand that you have a loss in 2019-20 and you get profit in 2020-21. But here if you want to carry forward the losses of 2019-20, then you have to first fill in the return of 2019-20. If you have filed the return of 2019-20, then in 2020-21 you can carry forward that loss and you can minus the current profit from that loss.
If there is a Government Employee or Private Employee whose Monthly Salary is crossing 50,000 or whose total income is ITR payable. In such a condition the company which is there gives you Form-16 and you are asked all the things. Like how much deduction is there in your ATC, how much is the tuition fees of your children, how much house rent you are paying and there are some other things which are answered from you.
After knowing this, they will calculate how much is your income, and how much income tax payable is coming out of it. Based on this, your TDS is deducted every month by calculating tax. In Short When you get your salary, then some income will be deducted from that salary which is called TDS.
If your TDS has been deducted and if you want it back, then for this you have to file an Income Tax Return. You can tell that my HRA has been cut so much or ATC I have paid so much, after telling all this, you’ll get the TDS that has been deducted are high.
If we talk about business like a contractor, his TDS has been deducted and when he will finalize his balance sheet and profit and loss, on the basis of that, if his TDS is more deducted then he can take a refund. To get this refund, he has to file Income Tax Return (ITR).
Any loan, whether it is Home Loan, Car Loan, Business Loan, or Mortgage Loan. If you want any type of loan, then the bank asks you for Income Tax Return(ITR) and that too for 3 years. Why? Because the bank wants to know how much is your average income for the last 3 years.
If you want a loan of 10 lakhs and the EMI of that loan is 20 thousand every month, then do you earn so much every month that you will be able to pay that EMI. If the bank wants to see this, then the bank will ask you for ITR and on its basis, it will be decided whether you should give that loan or not. If your income is high, then the bank will give you a loan easily, but if your income is not good, then the bank will make a decision on it by taking much time.
That’s why Income Tax Return is very important if you want to take any loan. You don’t need it now but it may happen in the future if you want to take a loan in the future then you should start filling ITR from now
If you are salaried then you know how much your income is but if you have a business then how can you know how much you are earning? In such a situation, the Income Tax Return will be helpful. If you have ITR, then you can show him how much your income is, whichever you have to prove your income.
You can give ITR as proof that I earned so much last year and will earn the same or more in next year also.
You must know that the PAN card is made of the same where you live and if a person is earning by going out of the state. Like if a person from Uttarakhand is earning in Maharashtra. In such a situation, when he will fill the ITR, it will be written in it that where he is living, where he is earning, his GST number is this. So Income Tax Return can be beneficial even for Address Proof.
Whenever you apply for a Visa, you are asked for ITR, because Income Tax Return is compulsory for Visa.
High Insurance Policy
Understand that you have to take health insurance if you have more than 50 lakhs, then in that condition, the insurance company asks you for Income Tax Return. Why? Because the insurance company wants to see whether you can pay this premium of 50 lakhs or not. By calculating how much is your expenditure, how much your income is, then that company decides whether you can be given that policy or not.
If you want to apply for a Government Tender, then that ITR will be compulsory for you. If you have not asked for it in the beginning, then they can demand it anytime in the coming time.
Benefit In Penalty
If your income is not 2.5 lakhs now but later on it increases and you do not file the return. The same if you have to take a loan now but you do not have ITR for 3 years, what will you do? You will not get a loan. But you say that I am ready to fill in the return of the last 2 years. In such a situation, if you have to fill in the return of the previous years today, then you will get a penalty.
How many? If your income is only up to 5 lakhs, then you will get a penalty of 1000 rupees and if your income crosses 5 lakhs then you will have to pay a penalty of 10,000 rupees. Also, you will also have to pay 1% interest on the Tax Payable Amount that you have. There will be no need to do all this if you have already filed ITR.
Who can and cannot file Income Tax Return (ITR)?
No matter how low or how high your income is, you can file Income Tax Return. If your income is less than 2.5 lakhs and if you do not fill ITR then you will not suffer any loss but if you fill it then you will definitely get the benefit which we have seen above. Where if your income is more than 2.5 lakhs then filling your Income Tax Return is compulsory.
Income Tax Slabs and Rates 2021
|Total Income||Tax Regime (without deductions and exemptions|
|Up to 2.5 lakh||No need or Nill|
|2.5lakh + to 5 lakh||5%|
|5 lakh to 7 lakh||10%|
|7 lakh to 10 lakh||15%|
|10 lakh to 12.5 lakh||20%|
|12.5 lakh to 15 lakh||25%|
|Above 15 lakh||30%|