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5 Reasons to file income tax return

When you file your return every year with the income tax department, it is kept as a record with them. This shows that you have a source of income and you are financially stable. Mind you it’s not just a record. You can also take it as a supporting document when you wish to avail a loan.
Yashika Jain

No.1 creating financial history

When you file your return every year with the income tax department, it is kept as a record with them. This shows that you have a source of income and you are financially stable. Mind you it’s not just a record. You can also take it as a supporting document when you wish to avail a loan.

Now you’ll have doubt how will it be of any use to avail a loan?

Let us take an example:

I file my return each year since I was 18, declaring my income from my internship while you have not filed any.

So when today at the age of 22 while I have just started working I want a loan for any reason. How do I prove that I have source of income?

It’s very simple. I’ll take my past income tax return filed any attach it with my current income proof. It will show bankers that I already have created a financial pool to support me. It will be an advantage for me compared to those non-filers of return.

No.2 claiming refund

Now it is not necessary that we all have taxable income after availing of all the benefits like insurance deduction, loan deduction etc. but my employer/banker had deducted tax (TDS) on my salary/interest income. How do I get back tax deducted by them even though I was not liable to pay any tax?

Answer to it is, file your return. Declare all your income and TDS details. If tax deducted is more than the tax you are liable to pay, you will get refund from the department.

No.3 Avoiding Penalty

Now let us talk how income tax department will deal if you don’t file your return.

Any person who does not file his return of income within the assessment year is liable to pay penalty of INR 5000. The amount may seem small but you know this record will always be maintained with the department. So it is not just for one year but even for the coming years you will be put in the bad books (defaulters list) of the department. Also there is interest payable.

No.4 Notice from department for non – filing

Now, you must be having doubt about how will the department come to know that I have not filed my return or levy penalty for non-filing?

Well the simple answer is PAN card. When your employer deducts your TDS they have to deduct, deposit and file the details of TDS with the department along with the PAN Number of person of whom TDS is being deducted. So even if you don’t file the return but your employer is giving details of your taxable income.

You declare it or not but the department already has your details.

No.5: Notice from department for Concealment of Income

We all have seen Hindi movies where there is income tax notice which is not delivered in time and the exaggerated consequences. Why does that happen?

They have not filed their return or filed but not paid the tax thereon. Income tax department can serve a notice if there is reason to believe that the assesse has concealed income or he was to file return but not filed. This is initiated by the department by serving a notice.

Read Other Articles of Yashika Jain

Categories: Income Tax

View Comments (18)

  • You are having Bank Fixed deposits , they are Tax at source say Rs 25000/ in a year the amount you got / received from your son / daughter , How you get the Refund of Tax deducted . You also failed to submit Form No 15H , 15G whatever may be the case . Though your income is below taxable limit . Unless you filed Income tax Return , you never get the amount deducted at Source . Some days latter on Department may issue notice where from the you get ?
    To me always submit your taxation returns showing all the sources of Income . May not be your Income for a particular year is below taxable .
    I am handling Two cases , of below non taxable , but notice has been issued to explain the sources of her /his income.

  • My wife is a doctor does part time medical practice and her income from this profession is below tax exemtion limit(0 tax).She is having active PAN card.
    Whether filing tax return is compulsory?

  • sir, i submitted itr for ay 15-16, but i forgot to submit for ay14-15 thougt i paid my tax, can i submit itr and how?
    g das, mb no 9038601699

  • Pls can u give us the link where PAN card holders without tax limit are needed to file income tax return or info as my husband says it's not needed but I don't know when my income from Fds get under taxable

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