Income Tax Return (ITR) filing is an annual activity seen as a duty of every responsible citizen of the nation. A person can claim the refund of the excess tax paid/deducted during a financial year by filing an ITR for that year.
Easy Loan Approval
Filing the ITR helps individuals when they have to apply fora vehicle loan or house loan. All major banks can ask for a copy of tax returns.
Works As Income and Address Proof
Income Tax Return can be used as proof of income and address.
Quick Visa Processing
Most embassies and consulates require individuals to furnish copies of tax returns for the past couple of years at the time of the visa application.
Carry Forward Losses
If the return is filed within due date, taxpayers will be able to carry forward losses to subsequent years, which can be used to set off against income of subsequent years.
In case ITR is not filed, the tax officer deserves the right to impose a penalty of up to Rs 10,000. Taxpayers are required to pay Rs 5,000 if the return is furnished on or before December 31 of the assessment year. The penalty increases to Rs 10,000 if the assessee files the return next year between January 1 and March.
Besides this, a delay in filing ITR also makes one liable to pay interest.
In case an assessee doesn't file ITR at all, a penalty may be levied which is a minimum of 50 percent of the assessed tax or a maximum of 200 percent of the assessed tax. Assessee may have to face prosecution also (i.e. rigorous imprisonment for a term up to 7 years and fine), in extreme and high-value cases.
Generally, taxpayers are required to file ITR by July 31 of any year (unless extended by the government). For the FY2019-20 (AY2020-21), the deadline has been extended to November 30, 2020 in view of the constraints due to the COVID-19 pandemic.