It is understandable that as a taxpayer, it is imperative to update oneself with the changing tax norms every year. Similarly, it is crucial to file one’s income tax return (ITR) in a timely manner. The ITR’s last date of filling for the financial year 2020-21 is December 31, 2021 for most individual taxpayers. That said, whether you fall under the income tax slabs or not, it is considered prudent to understand the importance of filing ITR. Below are the reasons that highlight why you should file ITR:
You want to apply for a home loan or some other sort of loan (other than a mortgage). Lenders often require documentation of a borrower’s income before authorising a loan. As part of the process, you’ll be needed to provide your tax returns from the past two or three fiscal years.
If you have losses under the headings “Capital Gains” or “Profits and Gains from Business or Profession” and want to carry them forward to the next financial year, you must file an income tax return.
If your employee deducts tax at source or you have a contract that requires TDS, you can claim a deduction by filing your income tax return on time. TDS paid is adjusted, and the income tax department calculates your net tax due in such cases. You can get a refund by filing an ITR if you don’t owe any taxes. Checking on the status of your tax return can provide you with an update on the status of your refund.
It is important to remember that every money you pay in taxes goes toward the country’s growth. It is one of the government’s most vital revenue streams. The government may use the funds to implement infrastructure or other development initiatives.
Proof of income is required when applying for a visa or a credit card for an international vacation. Tax returns from the prior three years are typically required in most cases. In addition, if you want to go to the United States, Canada, or any part of Europe, you must present your ITRs during the verification process. This information is necessary to help the other party determine if you are qualified for a visa or credit card.
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