A person must file their income tax return based on the income they earned during the tax year. The taxpayer is obligated to file his income-tax return if his total income exceeds the exemption level, which for FY 2021–22 is Rs. 2,50,000.
Following are some of the cases where the taxpayers are required to file their Income-tax returns-
- To claim a refund:- Tax is deducted by an employer on the salary received by the taxpayer during a Financial year. Here, the taxpayer is required to disclose other incomes viz. Salary from a previous employer, House property income, Interest income etc. to his current employer. He is also required to disclose the eligible tax-saving deductions such as life insurance premiums, contributions to PPF, PF, NPS etc., health insurance, term deposits etc.
The employer has to consider these details while deducting TDS from the salary. It might happen that the taxpayer fails to submit the documents of the eligible deductions in time, leading to an excess deduction of tax on salary. In such cases, the taxpayer is required to consider such deductions while filing his Income-tax return to claim the refund.
- To carry forward loss:- Taxpayer may suffer losses during the financial year viz. house property loss, capital loss or business loss. Such loss could be set off against the incomes earned during the financial year. However, if the loss still persists, then the taxpayer is required to file his return to carry forward the loss to the next financial year.
In some cases, the taxpayer is required to file his Income-tax return within the due date. If he fails to file the return within the due date, he cannot carry forward the loss to the next financial year.
- Application for finance:- Filing of Income-tax returns reveals the credibility of the taxpayer. When a taxpayer applies to banks or financial institutions, he requires to submit a project report for future creditworthiness. However, for past tax records of the taxpayer, banks insist on providing copies of Income-tax returns from the taxpayer for at least the previous three financial years.
- Application for visa:- Where the taxpayer is applying for a visa, his Income-tax returns are required to be submitted to the visa authorities.
- Contribution to the sustainable development of the country:- Being a responsible citizen of India, it's our duty to pay all the taxes and file the returns within the due dates. The funds collected by the Government as taxes are going to be utilised for the faster growth and development of the country. Hence the taxpayers get the taxes paid in return in form of the latest infrastructure in India.
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