From buying salt to a luxury item, every Indian has to pay income tax. According to the government, tax is something that general people pay to help the government to run the country. Though, filling in Income-tax Return (ITR) and payment of tax are two different and independent legal obligations. This year, the government has extended the date to file ITR to December 31, 2021.
ITR is a statement that shows the source of revenue, deduction, tax payable or tax refund, and status of an individual or company. Simply it is a form that is the basis of calculating the income tax of a person.
Why we should file ITR?
Filling of ITR is the responsibility of every person towards the nation. Government makes it mandatory for every individual who earned a specified amount of annual income within a pre-determined due date. Filing ITR is also important for individuals or businesses because there is a record of income by the tax department with applicable tax if any you have been paid. It is helpful for businesses and individuals to enter the subsequent transactions.
Filling of ITR is mandatory in the registration of immovable property. Three years of tax return makes it easier to register the transaction.
It is also beneficial while applying for any type of loan or credit card in the future. Government makes it mandatory for financial institutions to see the ITR returns of the past few years before issuing any loans and cards.
ITR filing is mandatory while claiming for adjustment of past losses. The filling return has given you advantages in both speculative as well as non-speculative losses, whether it is short or long-term capital losses.
When we should file ITR?
Government sets different criteria, age, and income limits to file ITR. According to age, the government sets different exemption limits. For below 60 years they have to pay tax if their income exceeds Rs 2.50 lakhs. For the person between 60 to 80 years, their exemption limit is up to Rs 3 lakhs and senior citizens enjoy free income up to Rs 5 lakhs annually.
The residents of India must have to file ITR irrespective of the level of their income. If the person either have any beneficial assets or account outside India it is mandatory to file ITR.
ITR is also mandatory in movable assets like bonds, shares, and ESOPs of foreign countries. It is also compulsory on the accounts of the foreign banks either it is zero balance.
It is mandatory on transactions of one crore rupees in one or more than one current account. Either you are deposited this amount in a bank or cooperative bank. An important point to be jotted here is that it is not applicable on only cash deposits but also deposited in any form in aggregate. For instance, if you have spent more than Rs 2 lakh on a foreign visit, you more than Rs 1 lakh on electric bills annually either it is rented or your own residence/office.