By Amit Gupta, Managing Director, SAG Infotech
In India, taxes are a major source of income for the government and a big portion of it comes from income tax. As the name suggests, It is a tax that is levied on the income earned by individuals and companies. Every year not only its necessary to file your ITRs (income tax returns) but also there is a strict deadline before which you need to file your ITR. Everyone thinks filing income tax returns on time is just a legal requirement. But they don’t know it also has various benefits. In this article, we will deep dive into the world of income tax and discuss the importance of filing your income tax returns on time in India.
Avoid Penalties and Interest
Avoiding penalties and interest is one of the main justifications for timely filing income tax returns. A penalty of Rs. 5,000 must be paid in India if your income tax return is not filed by the deadline. If you keep putting off filing, the fine could reach Rs. 10,000. In addition, if you owe any taxes and don’t pay them by the deadline, you’ll have to pay interest on the amount still owed. These fines and interest fees can be avoided by timely filing your income tax returns.
Another important benefit of filing income tax returns on time is that you can claim refunds if you are eligible. Such as you can get a refund on opening a new savings or PPF account and also a refund if you paid more tax than you had to. However, These refunds are subject to the condition, in which you filled your returns on time. You can avoid missing out on refunds by filing your income tax returns on time.
Build Your Financial History
One of the most important benefits of filing your income tax return on time is, it helps you to boost your financial history ie. CIBIL or Experian scores. Because your Cibil scores are essential for banks when they approve your loan applications. Also, these are key factors for credit card allocation and other financial products. And there is a simple reasoning behind this, by filing your income tax you demonstrate to lenders that you are a responsible borrower who pays their taxes on time.
You can also avoid Income Tax Department audits by submitting your tax returns on time. You are more likely to be chosen by the Income Tax Department for review. if you submit your income tax returns after the deadline. However by submitting your income tax returns on time. you can easily avoid the time-consuming and stressful process of scrutiny.
Filing your income tax returns on time is not just your legal responsibility. but it comes with more benefits than you think. Ofcource by filing your income tax returns on time. you can avoid penalties and interest charges these are some of the obvious benefits. But some other benefits that are hidden in the shadows are you can claim refunds, build your financial history, and avoid scrutiny from the Income Tax Department. Therefore, it is important to make sure that you file your income tax returns on time every year.