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When it comes to filing of income tax return, the most common views that we encounter as tax experts are thus.
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Ø My employer has deducted tax at source on the salary income received by me hence I don’t need to file my i-tax returns!
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Ø I do not have any taxable income hence I don’t need to file my i-tax returns!
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Ø I work hard & hardly find time. When spending time with family is rare, why waste time on filing i-tax returns.
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Ø I have anyway missed the deadline for filing tax returns (July 31), so now it does not matter whether I file the returns or not!
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Though these are the very popular views people have, the truth is much different. Technically any person who has total income in excess of the threshold exemption limit (Rs. 225,000 – For Senior Citizen, Rs. 180,000 – For Women & Rs. 150,000 – For Men) are supposed to file their income tax return.
With this background, we have set out the justifications as to why filing your i-tax returns is good for your financial health.
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Better Late than Never – In case you have missed the deadline of July 31, for filing your tax return, relax, it is still not late to complete your tax filing. You can do so without any penalty upto March 31, 2010.
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A stitch in time saves nine – Even if you have missed the July 31 deadline, you can go ahead & file your tax return immediately without any further delay. Penal interest is applicable for delayed filing, ONLY IF you have any pending tax liability. Suppose your entire tax liability has been paid up before March 31, 2009 then there is no penal interest liability for you to take care of at the time of filing your returns. In case there is any pending tax liability as on March 31, 2009 then the penal interest increases with each month of delay in filing your tax returns.
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Fail to file and pay the price – In case you fail to file your tax returns at least before March 31, 2010, you may be liable to pay a penalty of Rs. 5,000. Also, tax returns are subject to time barring provisions, i.e. currently you cannot file tax returns for any years preceding financial year 2007-08. Hence it becomes pertinent you start filing tax returns immediately.
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Create history, file tax returns – When you file your tax returns every year, you manage to create your financial record with the tax department. This financial / tax history is positively viewed and favourably used by most agencies with whom you may need to interact, such as when you avail any kind of loan (home, personal, vehicle loan, etc), when you apply for VISA etc.
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Proof of (financial) Life – Income Tax Return is essential for making any investment and goes to prove that you have a valid source of income to make such investment.
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Team RwT
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