Income Tax is subjected to be paid by each and every person and every business that earns an income through any savings account, products, services, pensions, businesses, etc. in the subcontinent of India. The Income Tax returns are taxes that re - funded to the people who have paid any extra taxes while paying the tax. In case the tax return sheet shows that an excess amount has been paid in taxes by the tax – payer, it will be refunded to them by the income tax department’s officers. The income tax paid by the individual has to be shown on a sheet and filed within a particular deadline after which it will not be accepted. If the income tax paid is higher than the required amount or the basic amount, then a tax refund shall be processed after the returns have been filed. Non - Resident Indians are also to pay taxes in India but only for the income generated with services they worked for in India and not in their country where they are a resident of.Income tax filing is extremely important as it allows the smooth processing of many other official aspects like financial matters and filings. Read further to understand the depth of why income tax return filing is important.
Process of Visa
While travelling to a country which requires getting a visa to enter the country and stay or study there, there is a visa application and, in some cases, a visa interview that takes place. It is advisable to always carry your income receipts while travelling abroad. The purpose of this is that the ITR receipt shows that you have a certain income in your home country, India and there are less chances or reasons that you would stay back in the visiting country or settle down there. While the visa process is taking place, you will be asked to submit your income tax return receipts of few of the previous years, like some embassies in some countries will ask for the ITR receipt of the previous 3 years and in some cases, they will ask for the most recent one. This is done mostly for the first world countries like United States, United Kingdom and other European counties.
For getting a loan
Income tax return filing is an important thing to do as almost all the financial companies or banks will ask for your ITR statements and receipts before they sanction you a loan. So, if you are planning on getting a huge loan, then it is best that you complete your income tax return filing process and keep the receipts handy. This is done to see if you will be able to pay back the loans that you have taken with your income. Also, if you have a spouse that earns, you can show them ITR receipts as well as sign them as a co - borrower of the loan.
Issuance of credit card
Credit card companies will ask for your Income tax return filing to see if you will be able to pay your credit card bills duly with the income that you get. They will also see your previous incomes to know your income stability.
Another reason as to why you need to complete your income tax return filing is to carry forward losses. Any losses that were short term of long term in a financial year cannot be shown in for exemption for tax calculation purposes. So, to carry your losses forward, you need to file your income tax returns. If you want to claim any adjustments against any part losses you got, it would be necessary for you to get complete your income tax return filing.
Insurance with high coverage
If you are thinking of buying insurance with a high cover, that is, more than an amount of INR 50 lakhs, then it is necessary to have your income tax return filing process completed. Nowadays, there are many insurance covers with a high sum assured cover of INR 50 lakhs to INR 1 crore, so for this you also need to pay a higher premium amount. Insurance companies want to know if you will be able to pay a high premium amount every month or year and hence it is necessary to have your income tax returns files and show them your ITR receipts. Also, the most important thing why it is done is to see what income bracket you fall into as only high incomed policy holders would need such a high life insurance cover. If you have a lower income, then your nominees or family will be able to sustain and lead their lifestyle with a lower cover. So, only if you are a high incomed policy bearer would you need a high sum assured life insurance cover to protect your family with. So, basically, the insurance companies see if the sum assured cover matches your income bracket.
Tax Refund Claiming
To be able to claim for tax refunds, you need to complete the process of your income tax return filing. The tax refunds will be given by the Income Tax department who need you to fill your ITR on time within the deadline. If there are any extra taxes paid by you, you will be returned the amount for that extra tax paid. Even if the tax payer’s income is less than the basic income slab of INR 250,000, they would have to complete their income tax return filing so that they can be eligible to claim the TDS (Tax Deducted at Source) deducted from the fixed deposits as a refund which will be processes and given by the income tax department.