Income Tax Day Special- Why it is important and who is eligible?

By Samyati Mohanty

Many people appear to believe that filing income tax returns is optional, therefore they disregard it as pointless and difficult. This is not a very healthy way to view income tax filing, as we shall discover.

Every year, filing tax returns is viewed as a moral and social obligation of each and every responsible citizen of the nation. It serves as the basis on which the government calculates the amount and means of citizen expenditures and offers the assessee a platform to occasionally request income tax refunds in addition to other forms of relief.

Why you must submit tax returns?

• Your total gross income was more than the basic exemption limit of Rs. 2.5 lakh (before deductions and exemptions) (Rs.3 lakh for senior citizens and Rs.5 lakh for very senior citizens under the old tax regime).
• Your business generated more than Rs. 60 lakh in total sales, revenue, or gross receipts.
• Your total income from employment topped Rs. 10 lakh.
• You travelled abroad for more than Rs. 2 lakh.
• You put Rs. 50 lakh or Rs. 1 crore into a savings or current account, respectively.
• Your total electricity expenses exceeded Rs. 1 lakh.
• You have access to sign checks in a foreign bank account, as well as overseas assets and income.
• Your TDS or TCS totaled at least Rs. 25,000 (Rs. 50,000 for senior citizens).
• You must request the TDS or TCS return that was paid.

What does it signify?

1. Filing returns demonstrates your responsibility.

The government requires that anyone who make a certain amount of money annually file a tax return by the income tax deadline 2022 set. The person is responsible for paying the tax as computed. The Income Tax Department will impose fines for unpaid taxes.

Those who make less than the allowed income threshold might voluntarily file returns.

Making returns demonstrates your responsibility. It also makes it simpler for people and enterprises to engage in subsequent transactions because the tax department records their revenue after deducting any appropriate tax, if any, from it.

2. In some circumstances, filing returns is required.

Even if your income is too little to require you to file taxes, it might still be a good idea to do so voluntarily. The latest three years' worth of tax returns must be presented as proof when registering immovable property in the majority of states. It is simpler to register the transaction when returns are filed.

3. Your credit card or loan provider can ask to view your return.

It's a good idea to keep a consistent record of submitting returns if you want to apply for a home loan in the future because the lender will probably insist on it. In fact, if you wish to apply for a loan as a co-borrower, you can even think about filing your spouse's tax returns. Similarly, before providing a card, credit card firms may demand proof of return.

Before engaging in business with you, financial institutions could need to view your returns over the previous several years. In fact, the government might make it obligatory for them to do so, subtly encouraging people to file returns  on a regular basis even when it's optional.

4. A return is required if you want to seek an adjustment for past losses.

Whether or not you get the required amount of income to submit returns, there are numerous benefits to filing returns on time.

For the purpose of calculating taxes, various losses experienced by an individual or a corporation, including speculative and non-speculative, short-term and long-term capital losses, and several other forms of losses, cannot be proven for exemption in following years. As a result, it's best to file returns on a frequent basis because you never know when you might need to request a reduction for prior losses.

5. Filing taxes could be beneficial if your returns need to be updated.

Even if the assesse truly needs to file an amended return, he cannot do so if the original return has not been filed. The Income Tax Act imposes a Rs 5,000 fine for failure to file returns. Even though completing taxes is a voluntary activity, there are situations when failing to do so may have legal repercussions, particularly if they later need to file an amended return.