Filling of Income Tax Return. Is it important! - CA Nitin Hargude A. Under the Law and regulations
1. It is mandatory to file Income Tax Return if you have PAN and Income which is earned is more than maximum Income which is not chargeable to tax i.e. basic exemption limit as prescribed under Income Tax Act, 1961.
2. As per the new guidelines issued by Central Government, if you earn income by any source as well as do any expenditure which is of sizable nature you have to disclose the same in your Income Tax return.
3. If you are trading in Share market, providing any kind of service or doing any business wherefrom earning profits it has to be disclosed in the respective Income Tax Return forms as given by Income Tax Department.
4. If you do any bank transactions, or sale and purchase of any assets the same has to be declared in your Income Tax return otherwise it is deemed to be assumed that you have deliberately hide the same from government.
5. If any amount received by you on which TDS is deducted the same has to be claimed only by filling Income Tax return.
6. If you wish to avail loan from any bank or financial institution, the first and foremost criteria for the same is your filled Income Tax Returns.
7. To avail any Car loan, housing loan, business loans etc you need at least 3 years regularly filled Income Tax returns as per the RBI guidelines.
8. To travel in any foreign country or to purchase any asset outside India you need your Income Tax returns. B. Personal Benefits
1. It makes your financial life secure and safe.
2. Filling of Income Tax Returns regularly makes you trustworthy and ethical in the eyes of revenue authorities.
3. Income Tax return is a standard proof for your earned income.
4. In the eyes of government and Income Tax department you become regular assessee.
5. Filing regular Income Tax returns makes your future financial planning less risky and stable. C. Myths about filling of Income Tax returns
1. Filling of Income Tax returns does not meant you have to pay Income Tax- You have to pay tax only after minimum income not chargeable to tax crosses above Rs. 2,50,000 for A.Y. 2016-17 thus if someone earns below the limit he/she does not have to pay Income Tax but still have to file Income Tax Return.
2. If I file Income Tax Return the authorities will Reid my house or business-This is not the case every time. There are criteria’s and conditions laid down by Income Tax department to reid someone’s house or business such as authenticity and genuineness of Income Tax returns or any undisclosed Income. So if you have completely disclosed all your details you need not have to worry.
3. Income Tax department do not have that much network to trace my income- This is also a myth. Mind you, Income Tax department is one of the most secretive and actively working departments in the country. It can verify and trace any person’s income, his source and details from any network attached to it like banking transactions, relatives’ transaction, property transactions, even social networking sites etc. So be aware!
4. Income which is not taxable need to have to be disclosed- In India under Income Tax Act some income such as Agriculture Income, Interest income on saving bank account, Dividend Income, Long Term Capital Gains, Gifts etc are not chargeable to tax & are called as exempt income. There is a misconception among people that such income need not have to be disclosed, but since it is an earned income or source to the future income the same has to be shown in the Income Tax return as Exempt Income under the respective heads of Income.
5. I have to file Income Tax return till my lifetime- This is again a common myth. As described above it is not necessary to file income tax return if you do not earn any income or profit. If in any financial year you have not earned any income you need not have to file income tax return. But still for that purpose there is option of filling return as “NIL”. Remember only two things are constant in our life “Death and Taxes” - Author is a Chartered Accountant by profession.
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